Hello everybody, and welcome to Qt Group's Q3 2026 results presentation. My name is Hertta Närvänen, I'm the Communications Lead at Qt Group.

I'm here today with Juha Varelius, our CEO, and our CFO, Ann Zetterberg, who will be presenting the results. After the presentation, we have time for questions, first starting from the room, and then, if time permits, from the line.

That's enough of me. Now I'll give the stage to Juha.

Please go ahead.

Good afternoon everyone, and welcome to Qt Group's Q3 results. We're going to go through the very traditional business highlights, then financials by Ann, and I'm going to talk about the outlook and guidance for 2026.

If we go on this current quarter, we had a we had a pretty good, okay quarter. As the third quarter is usually our slowest one, and this year we ended up on €51.7 million with a growth of 27%.

Top-line growth was satisfactory. We were very happy about that.

EBITDA margin was 11% and €5.7 million on that. That does include a one-off cost of €5.3 million, which was for these change management negotiations.

We still have some way to go on those, but kind of a minor thing to close. Our expectation or we, that includes all the one-off costs.

There won't be any more on those on fourth quarter or later on on this particular process. I do expect that we're going to close that process during this quarter pretty much.

On ARR, the ARR growth was 32%, but that's of course IAR effects pretty much on that one. We did have a pretty good growth on Qt license sales as well.

If we look on license sales, we do have a bit of a fluctuation on different regions. This time, the best-performing region was really on Europe.

APAC was a good second. Like we've had now some time, the USA has been the slowest-moving on on our regions.

If we look on the on the segments, there is not a whole lot of change on that. As we are on 70 different industries, and medical and defense—well, defense is particularly hot segment globally overall now.

If we look in the medical, medical is usually very long-term business, they they look beyond the the kind of economic downturns or upturns. They have a very solid long-term plans.

If we look automotive, it's kind of a mixed bag in a way that in China and APAC, our automotive is doing pretty well, and obviously our customers in Europe and US are a bit suffering. On renewals, we've always had a fairly stable churn.

It's relatively low churn, people that sign up for Qt usually renew. That's, well, the product is good, and usually when people start developing with some products, they don't do a kind of a running changes.

They they go with the one product all the way through the product lifecycle. That's a very typical thing.

We do have a very long-lasting customers, the ones that have started using Qt way back when are still doing that. The that renewal rate hasn't changed.

I I remember during the spring there was a lot of discussion that, well, AI is going is going to replace the developers, and AI is going to reduce the number of developers. We haven't seen that.

The renewal rates, if we look, people are pretty much renewing what they've been renewing or what they've been having licenses. We don't see AI effect on that.

We do see people using AI, of course, as a tool helping them, but we haven't seen reductions on the developer license usage because of AI. If we look on the where do we see usually people renewing less licenses is a situation where there is no new project starting and the project goes on a kind of a maintenance mode.

When you're on a maintenance mode and not so on a development mode, then you might need a less licenses. If I look the I've been in this job quite a while, and if I look the customers we've had in the early days, they're pretty much all all the big ones that were there then are still there, and so the it's in that sense, it's a very stable market.

CRA is, well, that's, particularly a European thing because in Europe we like regulations and laws and and and this type of things. The CRA is a it's a European thing, and it means that the you need to have DOCs and and kind of a lot of documentation, and you need to support your product at least 5 years that it's a cybersecurity.

When using Qt 6.12, the or beyond, you get that DOC from the Qt, and so it helps a lot for our customers on that. Particularly customers, if somebody's been using open source before and thinking that doesn't need a commercial license, this will drive that conversion.

Of course, for new customers, it's a it's a a good selling point. IAR subscription has been going well.

That's kind of expected because the in the beginning, we didn't know where it's going to land, but the as it started going pretty well, it'll continue to go pretty well. When we did the subscription change in Qt, it took us like 3 years, and then the majority of the people had had changed into subscription.

That's my expectation on as well on the on IAR case. We've done also the integration has gone forward.

All the main things have been integrated, I think it's fair to say that I don't expect any integration problems anymore. The, many things have been integrated.

We are working together, and I don't see any major problems over there. The in that sense, of course the integration continues, but the I I don't expect any trouble or problems on on that front.

I would say that the integration risk is more or less already behind us in in in that sense. Of course, when you buy a big company like we did on IAR, there is always a risk that there comes all kinds of integration hassles, but the it's been it's been amazingly smooth, I must say.

Probably the Nordic culture and and the closeness helps as well. If I Well, I'm going to talk more about when on the future outlook.

The if we look on the what happened during the third quarter, well, of course there was a bit of turmoil in oil prices and whatnot, and a bit of a war going Well, that war started earlier, but the during the third quarter that what's going to happen. Usually, when we have a lot of uncertainty, we do see people shifting from 3-year to 1-year licenses.

No major shift now, but if I look that the on different product groups, maybe a a bit more 1-year license sales than 3-year license sales, but no significant numbers or changes over there. In that sense, a pretty typical quarter for us.

No big surprises. I think, like I said already on the second quarter, that the we've seen the worst kind of behind us.

We're going into right direction. I see that there is a lots of room for improvement in in US.

Our profitability, obviously the third quarter is the slowest quarter, the profitability without the one-off costs would have been a bit over 20%, it's on a on a good level. I'm already going into the future outlook, I I I stop here and and talk more about that, but the on the like I said, on the change negotiations or this change we did, we said that we're looking for €20 million cost savings, and that is going to happen.

Like I said, we have a few small minor things in Europe to close, and then the whole process is closed, so that €20 million cost saving is is going to happen. When you look next year, of course we're going to be investing next year, don't make an estimation that our cost level will be this year cost level minus €20 [million].

The business does go forward, but the from a current this year current run rate, €20 million will disappear. Which means that the we announced then that the we're looking to downsize roughly 200 people, and and that was mainly some in US and and and and and well, it was US and Europe.

Europe was a big part of it. APAC was basically not affected a whole lot at all, and we're going to get into that 200 number or very close to it when this the whole thing is over.

That's where the majority of the €20 million comes from. More about the future outlook, but now I let Ann to go through the numbers a bit more detail.

Yes, hello. I'm going to tell you a little about the financial numbers.

We had, as you saw, a pretty good Q3 with 27% growth, with an exchange rate impact it was 26% growth, which was quite positive and we were quite pleased with it. The distribution licenses grew 18%, which was nice.

As Juha said, we were specifically happy with the development in EMEA, in application device licenses and device creation licenses we had a good increase in new sales. Of course it is the IAR also that affects the Q3 sales, as we didn't have IAR at all last year.

The growth that you see in maintenance, 155% in Q3, that is from IAR. Looking at the year-to-date then, the growth was 19.1%, with exchange rate change impact it was 21.7% at comparable currencies.

The distribution licenses year-to-date has declined, but that was expected as we had a very high level of distribution licenses sold last year. Of course the effect from the new sales in EMEA in device creation licenses and from IAR also is a large part of the growth in the year-to-date numbers.

Also I often get the questions about how the multi-year contracts affect the P&L revenue, as it is difficult to understand sometimes because the Qt revenues are to some extent recognized upfront for multi-year contracts. Looking at the third quarter then and also the year-to-date numbers, there is really no shift to longer contracts to push revenue growth.

It's actually a lower percentage of the total revenue share in Q3 and also year-to-date when it comes to those longer 3-year and 5-year multi-year contracts. The annual recurring revenue then, it grew by 32% at comparable currencies, which of course is IAR like Juha said, but IAR also has a very strong ARR growth during this period as we're moving into subscription revenue, which increases the ARR.

Also the Qt base business in SQuirrel and Qt also has a nice growth in ARR because we have very strong, long contracts and good relationship with our customers and a very stable low churn. Looking at the expenses side, we have done a lot of cost efficiencies and so, but of course the personnel costs are affected by the reorganization parts, the restructuring.

Those are restructuring costs that are booked in Q3. Those are €5.3 million, and year-to-date they are €9.7 million.

We do estimate that this is the full cost for the restructuring process even though we haven't fully closed some of the processes yet. We are about 1,000 people at the end of September, and IAR wasn't there last year, and IAR was over 200 people that were acquired.

Even though it is a increase of 80 people, you can see that we have declined the number of employees quite heavily during this period. Also the other costs are actually lower in Q3 than they were last year due to all kinds of synergies and cost efficiencies that we have chosen to do during this period to get a better profitability in the company.

It's also a natural effect when you made an acquisition that some of the costs are double. That hasn't fully been realized yet.

There are still entities to merge and still offices to merge and so. We can still have some effects from that moving forward.

The total costs then, they grew by 26% about in Q3, and also year-to-date about the same. That restructuring is still ongoing like Juha said.

We do expect that we will have that 20-plus savings from the actions that we have taken, but we do have certain investments that we're planning to make, you must have that into consideration when you plan our P&L or analyze that for the future. Then looking at the profitability, in Q3 that was €5.7 million, a margin of 11%, but if you adjust for the one-off costs, we actually have an EBIT of 21.4%, which is quite much higher than it was last year.

The EBIT year-to-date was 12.1%, but if you adjust for the one-offs, it's actually in level with last year's 17.5%, we actually reached 17.9% if we adjust for those one-off costs. Quite a decent quarter that we are pleased with in many ways.

Then looking at the balance sheet, of course we have a large part of goodwill, and that is the kind of a base, stable base, not changing from quarter to quarter as we don't write goodwill off. The other intangible assets, which are technology assets from acquisitions and also internal development assets, we write those mostly of over 15 years.

The internal development assets that we capitalize, as you might remember I mentioned to you before, those were €0.2 million in Q3, and this is IAR that still capitalizes some costs in projects, some development costs. Part of the projects have been finalized, and we expect that the rest of them will be finalized during this year, next year this will probably not be happening, and we will instead depreciate those assets moving forward as they are final.

The trade receivables are around 20%, which is of rolling 12 revenue, which is quite normal for a software company like us. We have large companies, and they require fairly long credit times, but so it's a normal and stable level for us.

The ending cash balance was 15.2, obviously lower than last year because we purchased IAR, and we are also repaying that debt. It will have a good liquidity, but it will not increase past last year's level as long as we continue amortizing the bank debt.

The interest-bearing debt was €126.7 million, and we still have bank loans of €120 million, and we pay those off every half-year with €15 million, yearly €30 million will be amortized. On the other receivables and other short-term liabilities, we still have those €5.2 million that we hold to buy the rest of the IAR shares.

The arbitration hasn't been finalized yet. I'm hoping it will be, but at least it's moving forward, hopefully we can close that one soon.

Of course there is also short-term liabilities increasing from the restructuring and letting people go. That is also booked as a debt in the balance sheet.

Equity, €212—€213 million is a 53.6%, stable balance sheet. As we continue amortizing our bank debt, that will also increase over time.

Looking at the cash flow, January to September, that was 29.5 compared to 32.4 last year. It's basically the same operational cash flow, but we are amortizing the bank loan with 15, so that affects the cash flow for the period, and the operational cash flow is affected by the interest that we pay on the bank loan.

That is short summary on the financials, and with that, I guess I will hand over to you again, Juha, to talk about the outlook.

Thank you.

Thank you.

We haven't changed our guidance that we've given for the year, the full-year guidance is still the same. The net sales 10% and operating margin 15% at least, and we're keeping those.

If we look on the business, how I see it, well, the fourth quarter obviously is always the busiest quarter, and at this point we do have the pipeline and everything is over there in place. If I look overall all our product lines that what we do see, obviously on IAR we do have a lot of subscription change, but if we look next year, IAR is going to be growing because of that price change already.

If I look on our other products, we do see a organic growth on all of them. We were actually on this very same room on our shareholders' meeting, and on that shareholders' meeting in the spring there were questions about our profitability, and we said that we can do measures during this year in order to be on the 30% plus-minus profitability next year.

That's where we are definitely solidly going towards. As we do have organic growth, and we will have a revenue growth also next year, when we said that we're going to do a €20 million cost savings, of course we're going to be also investing next year.

Now if we look that where the investments are largely going in this current environment, they are more and more on AI-related investments. Now we had a world summit earlier this week, and it was renamed Kloud, it's about our design tooling and design and one of the major ideas over there obviously is that the designers can start using AI and doing their designs, and later on it generates QML code right up front.

We're going to be adding, investing, adding AI agents increasingly amount on our tools so that they are easier to use. Over time, we do see that this will actually kind of hinder a bit that the languages, underlying languages, like on Qt now it's a C++, but in the future, the languages are going to disappear more on the background when you can use AI on front to use our frameworks and our tools.

On IAR, this transformation into subscription, it's going to go as it is going now and going to take a couple more years to happen. The reorganization thing, we do have some minor things in Germany to close down, but I think they're going to be closed, so as we think it's pretty much handled.

The market challenges are kind of when we operate in three regions, APAC, EMEA, and USA, and 70 industries, it's kind of difficult to say on one sentence that what does the market look like. We're doing pretty well in China.

We're doing pretty well in Japan and APAC in general. Automotive is doing there pretty well, as you know.

It was a few years back I said that they're going to be a day that we are going to be driving Chinese electric vehicles, and I think that that was a pretty accurate prediction. Some people still might have a Tesla, but the BYD is coming.

We're well-positioned over there. We're doing pretty well over there.

Then in automotive in Europe and in US, obviously our customers are suffering, and not only the automotive manufacturers, but the tier 1 manufacturers as well. Whereas on medical, we're doing pretty well all around the globe.

Defense is a very hot topic. That around defense industry there is a lot of money, a lot of startups, a lot of investments going on, and we're getting our share of that.

I think that that's going to continue for many years to come. Saying on one word that how does the market look like is very difficult.

In general, if I look that I'm happy how we're doing in Europe in overall when I combine all the segments. I'm happy how we're doing in APAC.

Doesn't mean that we wouldn't, there is always room for improvement. I'm not that happy how we're doing in US, I think that in US we can improve quite a bit.

There is a room for better execution. The long-term growth, I think that what I do get challenged is that I actually don't get challenged that will there be a screen pretty much on every device, and will there be touchscreens, and will all the devices be digitalized?

That is not I don't get challenged on that. Everybody I think that that's commonly agreed upon.

What I do get challenged is that will AI take over this all? Who knows when we look 5 years or 10 years ahead that what AI can do and what cannot do, right?

Usually, what we do is that when a new technology arrives, in the beginning we overestimate the effect, and then on the long term we underestimate, right? We usually overestimate what's going to happen in the next 2, 3 years, and then we underestimate that what the world looks like 10 years from now.

That's traditionally been. Of course, AI is moving faster than anything else we've seen before, but that's usually how things goes.

If I start from the kind of embedded systems that somehow are functional safety or safety-critical and they need certifications and whatnot, and CRAs and whatnot, the AI is quite far from that. If you code with AI, getting into a situation that you can have certificates for car brakes and whatnot and this type of things, I think that we don't see at all.

Actually, we see more that the use of AI is limited in this type of environments because it is crucially important that nothing goes wrong, and it is crucially important people understand that these certificates are met and nothing bad happens. Then we have kind of in-between embedded systems, and over there we see that people are using AI to help their work and whatnot, but we still see that people are pretty conscious on AI usage and basically for two reasons.

One is that when you do embedded devices, a crucial cost effect is the hardware, the amount of memory the hardware has, and the hardware itself. Manufacturers usually want to have as clean and as efficient code as possible so that they can have the cheapest possible memory and the amount of hardware for specific functionality.

AI, well, AI still has room to improve on that, right? It also means that these products need to be supported a long time, it makes sense that whatever is built in there, it's somehow structured, and architecture is known, and it can be moved forward to other developers maintain and whatnot.

There, frameworks do help. I think that the AI models will be using frameworks also going forward in that sense.

Then the third is that at least at this point of time, the software usually represents a small fraction of the cost of the whole product, not to mention that what does it cost if you have to do product recalls, right? The people are kind of calculating that how much do I want to save on doing software, increase my hardware costs, and taking risks that I might have product recalls versus that I save on the cost of the software.

That all kind of sums up to that humans and developers are very much involved into the whole process so far, and thinking about the architectures and using frameworks. Then we come to a software that is not so much on embedded anymore.

It's type of software that "I'll do my own web pages," right? If I do my own web pages and there are a couple bugs, I can fix them tonight, and then I have a new web page, right?

For that kind of use, AI is very good. We see it on a low end where the risk of something going wrong is limited, there the AI usage is increasing, and that's kind of the world we see now.

Going forward, what we see is that if we talk about the product, I think that and there is no timeline to this, but first of all, we do see that over time we're going to go more on consumption-based pricing. We have already some, and we will introduce more when we go forward.

Some people have asked that is there a huge risk involved in that, and I don't think there is because when we're going to start introducing consumed-based pricing, we can of course do it in a limited market. We can do it on the new customers only and see that how it really goes.

We don't have to go on a consumption-based pricing to all customers globally, existing and new ones. We can launch a consumption-based pricing in a particular country only for new customers and then view that how that usage goes.

It can be done in a way that you don't take a humongous risk doing it. Going forward, I think that we're going to have more and more AI agents on our products and which will help the use of our products.

Those agents will also be combined to each other in a way that if you do coding with Qt, you're going to be able to have integrated testing on that in a way that every time you do a code change, it automatically runs through the test on that code, finds bugs, and fixes them automatically, and then just reports that this what happened. We're going to have a design tooling that you can write text prompts and build designs.

You're going to be able to have agents that help you creating code with Qt framework, testing with our testing tools, and then IAR turning that all to machine language. I think that then using all those, you can use the whole set of products, or you can use a subset of products on consumed-based, and AI is helping you on all that.

That's kind of the future in the 3 to 5 years from now. Do I see that well, at least now we see that if we do AI-helped coding with Qt and it's done by ourselves, it's far more efficient and consumes tokens far less than if you just take a normal language model and put it to do something.

I think that those efficiencies will always be there. I don't think that the efficiencies having very efficient software on embedded devices that have very little bugs to prevent product recalls, that's kind of the fundamental thing on embedded world, and that's not going to go anywhere.

Eventually what that means is that our addressable market will grow because it will enable people with less skills to do more, right? When this world kind of comes, it means that you and I will be able to do simple demos that runs on real hardware.

Product managers will be able to do simple demos and simple coding and whatnot. If you think nowadays, if a product management has an idea, then they have designers designing something, and then it goes to R&D for development.

When this world comes more in reality, we can do more of that, and it means for Qt a bigger addressable market as we go forward. Then another change that we usually don't talk so much, but is also happening, is the way that the processes are run in companies.

That means, for example, that in former days, it was very important that you were visible on Google, and you had people that were able to optimize your Google visibility and whatnot. Nowadays that's kind of getting lost.

You need to be visible on AI, right? I don't know about you, but at least I'm talking so much, whatever I want to do, I ask AI.

I don't go to Google anymore. It's even better, I can use my native language on AI, and it translates and searches and does what it does and make recommendations and whatnot.

A buying process that you need to be visible on somewhere, or a buying process that we had previously that people came to read our documentation, that's of course changing quite a bit. One of the first things you need to be, you need to be visible on AI, which means that you need to be able to train the AI that it knows your product, it can recommend your product, it knows that how to help if there are bugs and whatnot.

We're very well down on that road. We've been doing that a long time now already.

That's kind of a change we talk a bit less. Of course we have a Q4 to close, and of course that's going to be the busiest quarter and the best EBITDA.

If I look the Q4, I'm pretty comfortable with it. If I look towards next year, this year has been a tough year in many respects.

We've laid off people, we've done many not so pleasant things and had one-off costs and all kinds of challenges. If I look next year, on a number-wise, obviously it's going to look substantially better than this year, particularly on a profit line.

I'm looking forward that it's going to be a better year. I'm hopeful to that.

Then is always this disclaimer that if something terrible doesn't happen, but I think that our new normal is that there is at least one or two wars starting somewhere, and I think that probably fair to say that for the next 2 years that I see forward, they're going to be a lot of surprises. What happens after that, we'll see.

With that, thank you, and I'm sure you have a lot of questions.

Thank you for the presentation. Felix Henriksson from Nordea.

I have three questions. I'll start off with the distribution license growth in Q3.

It's got back to positive territory at 18% year-on-year. Was this mainly timing, or is there something to extrapolate for the coming quarters?

No, it's timing, the guidance we've been giving before that it's flattish or small decline is still there. Yeah.

The thing is that we did report the distribution license revenue early on on a yearly basis, and the reason is the fact that it really goes up and down, right? On a yearly level, you can kind of see a bit of a trend, but the quarterly fluctuations are really big.

Quarterly fluctuations like last year, the biggest ones on quarter-on-quarter were like €10 million. It goes up and down.

Unfortunately, I can't promise yet another 18 on distribution licenses, no. It's like the previous guidance, that it's flattish, small decline.

Fair enough. Appreciate the disclosure on that.

Then on IAR, I think in Q2 you stated that around 68% of the customers had been converted into the subscription model. Can you update us on that figure?

You also mentioned that it takes still 2 years to complete the migration. Sounds lengthy given how far you are currently.

A bit of color on that. Thanks.

On that particular figure, I need help from Ann because I don't have it. On the before, I'll give you a little time.

In we had it on Qt, and when we did it on Qt, it kind of in the beginning it spiked, and then it kind of slowed down. Eventually, there are customers that will never convert.

They stay on old versions and whatnot. My expectation is that it'll slow down.

I think that 2 more years is and then we are where we are, and then I think that it's pretty much done. What was the percentage on third quarter?

It's not It is above 50%, but the 68% is not 68% of the customer base. It was 68% of the bookings at that time.

IAR has a large amount of customers who don't buy anything every quarter and so. There's still a large portion of the customers that will come and want to buy perpetual from us and so, and then we will convert them.

It's not 68% of the customer base, but more of the bookings there. That's the number we've been talking about.

That's still positive and more than 50% continuing.

Got it. Thanks.

Good clarification. Then finally, on the Qt licensing model change towards a consumption-based model, I think in the last quarter you were still a bit hesitant to comment about the potential revenue impacts of that.

Can you disclose anything more about that? Because logically thinking, it sounds like there might be some element of disruption given that you're moving from a upfront-based 3-year license booking model towards a more stable one.

It's too early to say, but of course we will introduce a model that our current customers won't get a huge price increase or a huge price reduction, to that matter, right? Because I think that our position in the market is that our products are really state-of-the-art, right?

They are really good. They're not the cheapest in the market either.

I don't think that we have a price elasticity really and to increase a whole lot of our pricing. On a developer, if and now I think that if we look overall the cost levels where we are, how much we charge, even we do go in a consumption-based modeling, I'm not expecting to have a huge revenue increase through that, but I don't want to see any decrease either.

It's going to be modeled through that. I think it's more where the world is going that developers are using AI as to boost their work, which means that there is more usage of Qt framework, and we think that fair enough to have that.

One equation over there obviously is that let's see how it goes, but as you know that earlier on people were saying that we're going to start using AI and we're going to get a lot of efficiencies. Sure, if you use a tool that's free of charge, but those days are gone, right?

Now people are paying for tokens. I know that on many companies, the cost of using AI is, it's becoming visible that, hey, this is how much.

I know that there are companies that are looking that what are we doing, and are we really using AI for something meaningful, because it does have a cost attached to it. If you look the AI companies and how much revenue they need to cover their investments, we might come to a point that the Indian coder is still the cheapest one, right?

We don't know, right? We need to view this from our customer point of view.

They want to develop software, and it has a total cost, and so we can't increase a whole lot our costs in that environment. We're looking for a revenue-neutral, but we're also looking for that we go into that consumption-based because AI is being used to produce something throughout our frameworks and tools, and we do have a quite a bit of tools.

It's not only Qt framework, but also our test tools and whatnot. We need to look the whole equation, but when we do get into that, they are very well integrated, and the AI is helping on using that.

We think it's a winning combination. It's definitely something that I don't know that the whole lot of companies have something like that.

I see, for example, some of the testing companies that are our competitors, they are trying to implement tools for developers. We already have 1.5 million developers on Qt framework, they're trying to move into that, hey, it's not only a testing tool, but you can also something for developers to develop.

This combination on consumption-based offering is a very compelling offering when we get there, and a very unique one. Let's see that if we can add any value.

From a customer point of view, what's the added value is that, hey, well, I get a whole set, and I can do the whole thing, and I don't have to think about it, and it works very well together. That's where the benefit comes.

Thank you.

Hi, thank you for the presentation. Waltteri Rossi from Danske Bank.

I'd first like to ask about IAR. I know you don't disclose this, so that's why I'm asking.

What was IAR's base revenue level in 2025, and how much has it declined in sales this year?

If you look the historical data on IAR, it was on a fairly slow growth, and it was on a bit over €40 million, I think it was 42 €42 million roughly, and it was on 5% growth year-on-year, it was a bit over 40. Of course, there was not a whole lot of changes when we acquired it last year.

The subscription change did start, but it was on a very early phases, and I think that we've accelerated it this year, the revenue decline has really come this year. Like we discussed already offline, we don't disclose the BU numbers, we don't disclose the BU numbers.

We were discussing early on that, it's a, well, high-single-digit millions, let's put it that way. Yeah.

You mean decline has been high single-digit?

Decline, yeah. Between

five between

€5 [million] and €10 [million], yeah.

Year-to-date?

Overall, I estimate that to be this year, yeah. Not year-to-date, but to give you some idea.

I think that some analysts were estimating that the decline can be even high as 30%, and I think that, well, that was a very high end, but so not that bad, but substantial.

Okay. That's helpful.

Thank you. Then second question relating to the license maturity mix.

You mentioned earlier that I think 1-year licenses are going a bit more than 3-year licenses. To me, that actually sounds that the split would be close to 50/50 right now of sales.

Can you give any indication on the split between 1- and 3-year licenses? Is it more like 50% or 30%, the 3-year licenses?

That number I don't have in my head, but I knew that you're going to be asking this, I was just looking that how much we sold on third quarter 1- and 3-year licenses, and of course we do have multiple products, and the change is very little, but on 1-year licenses, it was a bit more than on the 3-year licenses, but no substantial change really. I didn't calculate the millions, I was just looking the different product lines, a bit more 1-year licenses, but no meaningful change in that shift really.

All right. Final one from me.

You have now publicly stated your plans to change the pricing model at some point. Have you seen any kind of from customers, any buying changes in the buying behavior that they would be buying now the licenses with the old terms?

No. No.

No. Our customers are like Daimler, and LG, and Fortune 500 companies, and they very long relationship with our customers, they And if you look on the products that where we're at, of course we do negotiate with sourcing organizations and what, and of course they are tough negotiations and always that, "Can you give more discount?"

and this and that. The very long-lasting customer relationships, the users are actually deciding that what they want to use, and then the sourcing organization is negotiating.

If we don't do anything drastically stupid, they're not going to start changing. We talk too much about cars, but let's talk about medical devices, for example.

Our cost in the overall whole product, it's like this big, right? Yeah.

If you think that companies, they want to use the best of breed products to build their software, and if they can squeeze the software development tooling cost and testing cost, they're optimizing a size of the overall cost. If you think car, for example, yeah, there is a software cost, but our part of that software cost is like this much.

We're not the first line to start squeezing. It's more important for those customers that they, for example in Europe, they fulfill the CRA requirements and the software works and there are not recalls and it looks cool than the optimized.

That's kind of the position where we are. The users are happy with the products, they're not changing.

Most companies are very big, the pricing discussions are with the sourcing organization. Their target, by the way, is always that, "Lower the cost by 5%," so it's a funny discussion.

They want to have more, cheaper, and we want to Yeah, so that's how it works. Yeah.

Absolutely no. We're going to move very cautiously on that consumption-based pricing models as we go.

We have had customers that are using AI, and they've been asking that, "Hey, well, how do you want to charge this?" , right?

Got it. Thanks, Juha.

Good afternoon, it's Matti Riikonen, DNB Carnegie. Couple of questions.

Firstly, you already discussed a bit about the difference between ARR and organic growth, but could you just quantify that how much the maturity mix in your growth is affecting your top-line growth and how much that has done in the first three quarters of this year? I'm just trying to understand that what kind of change in the numbers that we see is really affected by the maturity mix.

Thank you, Matti. That was a very specific and very articulated question, would Ann want to answer?

Maturity mix, you mean the 3-year and 5-year contracts then? How much of those there are?

I can say that as I said when I was up on the stage also about the financials, that the multi-year contracts are in Q3 as a share of the total in Q3, they are lower, the multi-year contracts, than they were last year. They have a lower effect than they did last year, the growth does not come from that.

It is actually the same for the year-to-date, but much smaller change, it's more close to the same share of the total revenue. Does that clarify it?

Yeah.

For exact, we've actually probably looked into Yeah. Mhm.

All right. No major changes in the quarters either, I assume.

Q3 has been kind of favorable in terms of or not as favorable as earlier, but then in the first half you had quarters that had the positive impact on top-line growth.

You mean Q1 and Q2?

Yes.

I believe in Q2 we had a higher degree of the multi-year contracts. We communicated that right.

Than we did in Q1. That there was some effect there in that quarter in the growth, but not in Q3, I would say quite the opposite.

All right. Thank you for that.

Then the second question is that normally, when you have prepared yourself for the next year, you have been growing your resources. Now you also say that you would need more resources in '27, you need to invest.

Of course in this environment where you have just sacked a lot of people, that might be a bit difficult. When can you start investing in growth more?

Is that going to be in first half or Q1 next year, or how do you plan to do that? I think that, well,

we are hiring already, right? Of course we do need replacements.

People are leaving voluntarily as well, and we do need increased number of people, specifically in APAC. We do see, we're hiring that.

Then on a growing scale, we need more AI capabilities, and not only on R&D, but also on a business side, that how do we use AI in our own processes to improve them, and then on the R&D side, if you think that what I was describing that we go in the consumption-based model kind of a platform where all our products are, and we build AI agents on the top of that, we need new skills on that type of development, and we're doing those hires as we speak. In that sense, it's a bit of a shift, and I think that next year on many companies, you're going to be seeing more of that, that there are change negotiations and at the same time, same companies are hiring.

All right. Thank you for that.

Then you talk about the importance of regulated customer industries for you, so that many customers are actually in those kind of environments. What is the revenue share of your customers actually being in regulated industries?

That I don't know, yeah. I would have to because it's not so straightforward.

We do have if you think, well, we talk so much about cars that I met some investors that they thought that we are only in the automotive industry, and I decided that I'm not going to talk about cars, but I'll talk cars. On cars, you do have functionalities that are not safety-critical at all, right?

If you think backseat entertainment, right? Then you have brakes.

To kind of that's why I'm saying And on defense, a same thing, that you do have applications and functionalities on defense that are not safety-critical at all, and then you do. It's not so that you can say one industry, we should kind of look into functions.

That's a very good question, and that's something that we need to look and see that where we would get that. IAR is very much in that business, and we have a Qt framework quite a bit on that business, and then our testing is more a broader on all kinds.

Sorry, I can't give you an answer on that.

All right. Then could you just briefly describe your momentum in your different business segments or product segments like Qt Legacy, then you have the testing and quality assurance, and then you have IAR?

You have already touched on the IAR, which seems to be doing fairly well, considering that there is reductions to be made. In Qt Legacy and TQA, how would you characterize the momentum in those?

Sounds so bad to say Qt Legacy. Let's

define it that way, everything else than testing and quality assurance and other acquired businesses.

Yeah. I get it.

Yeah. I'll try to describe you a bit.

Before I was saying that, if you look a successful frameworks, tools, they are €200 million plus-minus something. The ones that have been really successful.

Then you have quite a lot of businesses that are €40, €50 million, right? You can say that Qt has been already very, very successful.

We've been able to create a user community of 1.5 million. Many big companies been trying to do something like that and failed.

It's a great success. Qt being where it is, it's been a great success.

The thing is that there are, whatever, 25, 30 million developers in the world, and the 5, 6 million C++ developers, and of course that's the limiting factor on that how big Qt can become, right? Then we became this business model that we have the distribution licenses, right?

Which is price per unit, and that kind of gives you an other alternative growth, which we've been using, and that will continue to grow and over the course of time. Of course we were coming to a point that the growth will slow down, and I said that, over time, maybe Qt can be like a €300 million business, and where do we grow from there?

Then the universe sent us AI. Now AI actually means that as we go further develop this, the more people will be able to do coding and using Qt framework through AI.

You don't have to be a deep C++ coder, you can be a developer, and so our addressable market in that sense is growing. Same goes with all our products basically.

If you look the old Qt or Qt itself, if we can keep a Qt on a 10% give-take organic growth, that's what I'm looking for on a longer term, right? You asked that how would I rate the products.

Squish and testing, I would say that over there, you're going to be looking double-digit growth starting with the two. Originally we said that our target with Qt is a €100 million business, and a lot of people were smiling at us at that time, maybe they were thinking that our target is too low.

We got beyond that. I've said before that I see Squish like a Qt 2.0.

Squish has a bigger addressable market. If you look that everybody needs automated testing, it works on multiple languages, it's very well integrated into Qt framework.

If you're doing something with Qt, it makes all the sense in the world to do the testing with Squish, and use also Coco for code coverage. Axivion itself is one of the best tools for static code testing, and the architecture verification is a very unique offering on that.

It's very easy to see that it's going to grow into €100 million business. The growth now in the early days will be that 20 20 plus-minus something percent it's on the coming years.

On IAR, it's right in its own segment. With this price increase on the next couple of years, you're going to be looking like 20 plus-minus something growth.

That's kind of give you an idea. Really where do we need to spend the time with IAR on the next couple of years while it's growing through this price conversion is the fact that what product development we do over there, where do we find new customer segments, and a bigger addressable market for IAR to continue that organic growth after that.

That's basically it. Would I call Qt Legacy because it's percentage-wise growing less?

Not necessarily, because it is bigger than all these others, but these others are on the earlier phase of their path. If you think the really old way of looking the product lifecycle, obviously the Qt growth is on percentage-wise slowing down, and these newcomers are faster.

If you look absolute euros, then the story is, of course, a bit it kind of evens out. What we're looking for, the design tooling is interesting to see.

I actually don't expect huge revenue numbers out of it. I kind of see it more like an integrated tool making our offering more complete so that you can start from design and then you move on into developing the things, whatever you're doing.

Let's see. It might be a product of its own right, and people are buying only that, but I'm not counting on it.

I'm counting on it more that early on they can do the design, they can see the result on target hardware, and then they can make it actually workable code. That's the added value for us.

Only 6 minutes over time. Thank you so much.

Thank you very much. Looking forward seeing you after fourth quarter.