Earnings call transcript: Xplora Technologies sees 188% revenue rise in Q1 2025

Xplora Technologies reported a significant jump in revenue for Q1 2025, with an impressive 188% year-over-year increase, reaching $339 million. The company's stock showed a slight decline of 0.8% pre-market, with shares trading at $37.40, down from the previous close of $37.70. According to InvestingPro analysis reveals the company maintains a healthy financial position with a current ratio of 1.76, indicating strong liquidity to meet short-term obligations. The company's gross profit margin stands at approximately 50%, demonstrating efficient cost management despite rapid growth.

Key Takeaways

• Xplora Technologies' Q1 2025 revenue surged by 188% YoY to $339 million.
• Recurring service revenue grew by 30% YoY, highlighting strong customer retention.
• The company consolidated its acquisition of Doro, impacting cash and inventory management.
• Stock price fell by 0.8% pre-market despite strong financial results.
• New product launches and market expansions are planned for the coming quarters.

Company Performance

Xplora Technologies demonstrated remarkable growth in Q1 2025, significantly outperforming its previous year's results. The company's strategic focus on expanding its service offerings and integrating recent acquisitions played a pivotal role in this performance. The consolidation of Doro has been a key factor in driving revenue and optimizing inventory levels.

Financial Highlights

• Revenue: $339 million, up 188% YoY
• Recurring service revenue: $80 million, up 30% YoY
• Gross profit: $191 million, up 182% YoY
• EBITDA: $18 million
• Adjusted EBITDA: $29 million
• Cash balance: $541 million, up 358% YoY

Outlook & Guidance

Xplora Technologies is optimistic about its future prospects, targeting 1 million subscriptions within the next four to five years. The company plans to launch a youth phone on June 5th and introduce a Doro SIM card this quarter. It also sees potential to add €300 million in EBITDA if 10% of Doro phones activate service, indicating a strong focus on expanding its market presence.

Executive Commentary

• Sten, CFO: "Every single day, we wake up with one clear goal, to provide 1,000,000 subscriptions within the next four to five years."
• Julian, Doro CEO: "We go the extra mile to deliver technology that is easier for people to use."
• Julian, Doro CEO: "Our job is to empower them, to help them look after the elderly people."

Risks and Challenges

• Supply chain disruptions could impact production and delivery timelines.
• Market saturation in the senior tech device sector may limit growth.
• Macroeconomic pressures could affect consumer spending and demand.
• Integration challenges with the Doro acquisition could impact operational efficiency.

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Q&A

During the earnings call, analysts inquired about the company's cash usage strategy, which is aimed at maintaining flexibility and generating interest. The total acquisition one-time costs were approximately €50 million, and sell-in fluctuations were attributed to financial year-end inventory management. The company also continues to acquire Doro shares, currently holding 89.61%.

Overall, Xplora Technologies' strong financial performance in Q1 2025 underscores its strategic growth initiatives and market expansion efforts. While investor sentiment remains cautious amid broader market conditions, InvestingPro indicates positive momentum with strong returns across multiple timeframes and forecasts continued growth. Subscribers to InvestingPro can access 12 additional exclusive ProTips and a comprehensive Pro Research Report, offering deeper insights into Xplora's valuation and growth prospects among 1,400+ top stocks.

Full transcript - Xplora Technologies As (XPLRA) Q1 2025:

Sten, CFO, Explora: Good morning, everyone. It's 08:00. We are live. Welcome to Explora's Q1 twenty five presentation. It's really nice to see we have a full house.

We are really excited to present the results, this time in an even slightly extended format because we have a lot to showcase today. The usual suspects always presenting the report to Q1, we'll start with myself, our CFO, Knuth and Chettle, but we also have two additional stars today, our CTO, Sanyo as well as Julian from Doro. So as mentioned, the format today, slightly different. We will start with Part one, which will be the traditional Q1 report with the financial highlights, the detailed information and operational updates. Then after that, Cetel will take you in through Part two, which is our post quarter event.

And in post quarter, we would like to give you a really good summary on time lines and where we are related to the execution and rollout of both our youth product as well as the senior rollout. That's why Sanyo will join presenting the youth rollout, and we have the pleasure to have Julian from Jorro presenting the latest and the greatest from Jorro. In addition to that, they will also be here after the event, so we actually can have some live demos as well. I know some of you look forward to that. I will end the presentation today as well to give you some of the latest updates related to the road to 1,000,000, how it all comes together, and we'll end with the outlook and Q and A.

So that's the flow today. We hope we'll be able to take you through that roughly forty minutes, and we'll be here, of course, after the presentation as well. Before I give you the highlight of the Q1 number, a lot has happened, and Q1 is a very special quarter as well. For the first time, we report consolidated numbers. So going forward, our key number will be on a group level.

So we just would like to give you a little bit of those drivers in this first quarter. So first time today, we present consolidated numbers, including Doro. Also a huge appreciation to our finance team that has been able for this quarter, as they promised, to also take from NGAP to IFRS in the reporting. So also the comparable number from Q1 last year to this year is both comparable number for IFRS. Since we have also then closed the financial part of the transaction in this quarter, We also just would like you to give you a couple of those one off costs immediately, so you have them back of your mind when you go through the presentation.

Roughly SEK 11,000,000 is one off from our OpEx level, so have effect on the EBITA and roughly 32,000,000 one off effect of expenses related to effect on the EBIT. So keep those numbers in mind, and Knut will really, in detail, guide you through what is behind those number. Also Q1, since we are launching a lot of new products, within kids, youth and, of course, also senior, we have also used Q1 a little bit to adjust channel and stock as well this quarter. We'll also come back with some details in that regard. The numbers you have all been waiting for on the screen here.

And again, as always, Knuth will guide you through the numbers and what lies behind. But first time we report with group, so on a financial group level, group revenue, $339,000,000, up 188%. Of course, the percentage will be quite high due to first time reporting. Our recurring service revenue, as you can see, this is only, of course, kids because still so far, we have not started to implement SIM cards in either youth or in senior, which we'll come back to in the time line. So still only from our kids watches, also up almost 30% to CHF 80,000,000 recurring services with subscription base of CHF 3 50 8 40 1 percent up from last year.

And with the same or potentially even stronger starting point this year as previous year. And again, Chetel will take you through all those breakdowns in detail. Gross profit, almost 200,000,000, up 182%. And we have a reported EBITA of NOK 18,000,000, as mentioned, adjusted for the one off related to the acquisition. Adjusted, it would have been short of NOK 30,000,000.

And I would say, a very healthy and strong cash balance of $541,000,000, up 358% from last year. I know Knud is all happy about that, as you all. But I would also just like to take a slight moment to also emphasize that with those Q1 performance number, it also really puts us in a solid foundation for going forward. Because if we look into the last twelve month revenue, so the combined revenue, including Doro twelve month behind, the company currently now are trending at a revenue of roughly 1,700,000,000.0, so last twelve month revenue accumulated. So we are from now a significantly larger company, which we also really can see in the inbound interest, the meetings we have and engagement from the market in general, a significantly larger company.

And also last twelve months of EBITDA trending roughly around 200,000,000. If we take all our annualized service revenue twelve months forward, we are now at AIR at roughly NOK $380,000,000. And again, remember, that is still only from the revenue driven from the kids smartwatches. We have not yet started to implement our big opportunity in both youth and senior, which Hetel will guide you through in a second. Since there is a lot of new information, a lot of new number, I just also wanted to highlight some key takeaways I would like you to pay extra attention to when my colleagues will guide you through them.

The first, we emphasize as a very important strength for this quarter. We see that within our core kids category, we have seen a very strong sellout and a very strong activation in the market. But also, if you recall, a lot of you investors who have been talking to many, many times, we have always said we have roughly accumulated 20% SIM activation in the global market within our kids smartwatches. This quarter is the highest number ever. I will not disclose it yet, but I will give Chettle the pleasure to actually present the trends on the SIM activation.

So very strong this quarter. Pay attention to that. And like we said, because of the combination of our strong service revenue generated in Q1, and I'm very pleased to present as well, Julian and Doral team has done a tremendous work in order to really drive a strong revenue and a strong profit. So combined with our high service revenues and the Doro performance, it's also very solid overall performance in Q1. And like mentioned, a huge job has been done related to finalize the transaction from a financial perspective and IFRS.

And as both Chetl and Sanj will highlight to you, a lot of work has been done in order to complete the technical integration on our platform. There is also a couple of things that is very much so on our radar going into Q2, very important for us to execute. Although we have completed the technical integration with all the platform, we are still now in the final stage with the commercial planning for the rollout on both kids and youth. Again, Chet will explain and pay attention to that. We even though we have had a very strong activation and sellout in the market from our kids smartwatches, we have had slightly lower sell into the channel.

Chetel will take you through that in Q1. It's very important for us that we should recoup that in Q2. And I'm happy to report that current or so far in the quarter, we have, but that is also something that Chetel will take you through. It's very important for us to make sure that is happening. And of course, being two companies, Toro and Explora, it's very important for us now to make sure that we have a very efficient integration, how we work, both from a cultural and process point of view as well.

So a couple of things that we are paying attention to into Q2. Before I hand over to Knud, I just wanted to summarize some of the reporting formats going forward. We get a lot of questions on that. Just before that, so it's crystal clear, I'll take that at the end as well. We have a very clear target.

Every single morning when we wake up, go to work, it's one key target that we have in mind. Four to five years, as we said last year, we will have 1,000,000 subscription. Everything we do is related to make sure that we can do that quicker, easier or with less risk, every single thing that we do, 1,000,000 subscription. The strategy we executed is then to go from one category, kids, and extend into youth and senior, one with the strategic collaboration, one with acquisition. With a product strategy now having a range of hardware products, still target a 30% margin, but we have significantly more product in the portfolio and still then with the majority of our focus on the SIM activation with two different price points.

We'll continue in that regard to report a monthly subscription number. Currently, so far, only with kids watches. As soon as we get meaningful data from youth and senior, we'll also specify and add that to the monthly subscription once we have a meaningful number. Until then, we'll continue to report as one subscription number per month. On a quarterly basis, such as today, we'll focus on the overall P and L.

We will really try to guide you through the subscription development and also the kids activation. We'll focus more so on the quarterly reports going forward on the activation of watches and product in the market because that gives the market even more insight on actually the sellout, the performance, how much product are we selling in the market versus just showcasing how much we are selling into the channel. So we'll do a change in that to give you more overview and oversight in that regard. And we'll also, on the quarterly report, give you a very good and transparent update on our road map, where are we accordingly to our plans to meet our target. Half year and end of year, we'll give you more of detailed breakdown in sell in and sell out as well as detailed information about the different channels and markets.

So that will be the reporting format going forward. And with that, Knut will guide you through the financial details.

Knut, CFO, Explora: Thank you very much, Sten. Good morning, everybody. Sten has gone through some of the key numbers. But before I start my part to go through all the financials here, I would like to mention a few things. For Explora, we have then done a transition to IFRS.

For those who are aware of IFRS and the conversion, it can be a lot of items that change from these two different standards. We have gone through all relevant standards, and the impact on the EBITDA last year is about 1,000,000 on EBITDA. And also the impact on Q1 numbers last year is about EUR 2,000,000. So the overall impact on our big numbers, they are limited when we convert from Norwegian GAAP to IFRS. But still, we have gone through all the relevant numbers.

Explora is also reported as a kids and youth segment in the report. We have significant one offs in Q1 twenty twenty five. Sten has mentioned some of them. I'll go a little bit more into the details on them. And we have also done the consolidation of Doro from January 1.

Even though it was acquired January 15, we have consolidated this according to the standard from January 1. And the Doro figures, they are reported as the senior segment. Doro is publishing a separate Q1 report since they are still listed in Sweden. There are also some difference between what Doro report and what we include in our constellation, and that's related to their cost for this transaction. When we go into the Q1, then it's reflected, it's the full consolidated result also then with minority interests.

So how is the big numbers in Q1? As Sten said, our revenue is NOK $339,000,000, that's almost three times the numbers we presented in Q1 twenty twenty four. And also the gross profit ended on NOK 191,000,000, that's also three times higher than what we reported a year ago. So we are very, very different company now compared to a year ago. Our gross margin continues to be very strong even with Doro included.

So we keep the gross margin quite high also in the consolidated numbers. The EBITDA goes up from EUR 18,000,000 in Q1 twenty twenty four to 18,000,000 in 2025. And if you adjust for the 11,000,000, that is really linked to our advisers in the acquisition and the transaction that must be adjusted for. We actually don't like the concept of adjusted, but in this quarter, we need to present it. So then our EBITDA adjusted is 29 compared to four.

Another part of your interest is that if you just take the two first column here is what we report. If you take the third column, then we just merge the two companies last year. So Q1 twenty twenty four, Doro IFRS, Explora IFRS. We can also see here that there is a very strong increase in revenue, in gross profit and also increase in EBITDA and EBITDA adjusted. So all of these metrics are increased combined pro form a Q1 twenty twenty four compared to Q1 reported.

Going through a little bit more on the group. And as I said, the group revenue is increasing with three times, and the majority of this revenue increase is of course coming from Doro. We have also an increase in gross profit and as you can see, the gross margin is also showing a very good trend.

Sten, CFO, Explora: The

Knut, CFO, Explora: EBITDA, I don't need to say that one more time maybe. When we're coming into the kids and the youth segment, that is Explora, we also see that we have an increase in revenue in Q1 twenty twenty five compared to a year ago. There's one thing that is very important to mention. In Q1, Explora did a lot of work in order to prepare for Doro implementation of connectivity. This work has been charged to Doro on an arm length basis in order for them to implement the connectivity.

So that invoice of NOK 8,000,000 is then included in our revenue numbers in Q1, and it's absolutely a necessity for Doro to start implementing the connectivity. So all the work has been delivered and done from Explora side in Q1. You can also see that the gross profit has increased year over year with a continued increase in gross margin over the quarters. And then to the maybe the most interesting piece of the information in the segment is the service revenue, have an annual recurring revenue of $318,000,000 as of now. That is service revenue in Q1 twenty twenty five multiplied by four, and this is an increase of NOK 68,000,000 year over year.

And as you can see, the gross margin on these services is very steady on 82%, eighty three % every quarter. Then we have the senior segment. And as I said, Dora is reporting their own report, and we have included some space here in the middle that we can start reporting on service revenue when that happens. Happens. Revenue for Doro, this is then converted into Norwegian kroner, is going up also in Q1, SEK '1 hundred and '90 '7 million to SEK $229,000,000.

And also the gross profit has a substantial increase in Q1 from NOK 83,000,000 to $222,000,000. So the light greens are what's reported by Doro previously, and the green is dark green is what we have included. So the total profit and loss. In IFRS, we do not amortize goodwill, but we have done that before. Now it's four years since Explora acquired Explora Mobile.

And as you remember, we have amortized the customer contracts every single quarter. And the last quarter we are amortizing the customer contracts is in Q1. So the EUR 24,000,000 that is included in Q1 twenty twenty five, we have about EUR 5,000,000, that's the last amortization of the customer contract. So that amount will then decrease with the NOK 5,000,000 in the coming quarters. When it comes to the NOK 32,000,000 in financial expenses and that is one offs, and that's basically arrangements fees and fundings fees for the loan.

If we had continued with the loan and not replaced it with a new loan, we would have been able to take the majority of that number and just spread it over the lifetime of the loan. But since we converted the first loan into the new loan, we have to then expense it in the P and L in Q1. There is also 12,000,000 in interest for acquisition loan in the quarter, 7,000,000 that is net financial items, expenses that is then the normal financial expenses. And we have a NOK 25,000,000 currency impact of the loan. So what we did, if you do remember that, is that we acquired Doro in January 15.

That was a fully funded loan for that transaction without any equity. During Q1, we decided to refinance that loan with a long term loan of four years. We all know that there was some specific international turbulence during Q1, and we decided to go with a certain road to do the bank loan. And we have that bank loan in Eurobor interest with a small with margin on top of that. We have also hedged about up to 75% of the interest, so it's a fixed interest fee loan.

It's, as I said, four years duration, and it secures long term financing and strengthen the liquidity at quite okay terms. And of course, the original acquisition loan was settled after the Q1 financing. Balance sheet, I'm just going to touch a few things here. We are now three times more assets than we had also at year end. We have EUR 1,900,000,000.0 in total assets compared to EUR 600,000,000 in Q4.

'1 important thing that I mention every quarter is that we have been able then to work on our working capital items all the time. A year ago, Explora had about EUR 100,000,000 in inventory. We gradually have optimized that going down to 80,000,000. And in Q1 twenty twenty five, we are now on a 77,000,000 level on the inventory. So we are doing a very good job to optimize also the working capital.

The bank loan is then reflected in the P and L of EUR $936,000,000. And as you also can see, we have the LC, the working capital financing, is also paid down quite a lot in Q1. Maybe the most interesting number for me is basically that we have increased our cash total cash position going from $235,000,000 at year end, and we have now $545,000,000 in the bank. So we have a solid, flexible and strong cash position in Explora. Thank you.

Chettel, Operational Lead, Explora: Good morning. I'll take you through the operational part. Going forward, we will start we have started now to report on activated watches instead of sold watches. Activated watches means the first time the end consumer has bought and actually activated the watch for the first time. That gives a more through reflection of the actual demand for our products because we have a combination of direct and indirect channels.

The majority of Explora's sales goes through distributors, retailers and telcos on top of our direct to consumer channels, which is the web and the Amazon channel. So you see on the red bars that we have a stable and slight growth of activated watches in the first quarter. And as I said, they come from three different channels. We still announced one page that you should really pay attention to, and that is the share of smartwatches that are being sold with an Explora recurring service. So a few years ago, before the acquisition of Explora mobile companies, there were only hardware sales.

Today, we have been able to grow the share of activated watches sold with a service subscription to 37% on twelve month rolling basis. That means that 37% of the 500,000 watches we have been selling through the latest twelve months have been activated with a service. And that is the mobile connectivity part. It's the B2B part, which is the telco revenue we get from the services and the service fee. And that is also important to have in mind.

We know that the number of watches is the foundation from the service revenue. But when we are able then to also increase the share of watches being sold with the recurring service revenue, that is what really drives the growth on top of what is related to the watches. Also happy to announce that we have a breakthrough in Spain these days. We have started a cooperation with the largest retailer in Spain that now on a fixed basis, mandatory, will sell all the watches with our mobile subscription plan. So a breakthrough in the Spanish market.

So we are gradually, market by market, working with telcos to also get revenue from the telco part and on the retail side, introducing services in more and more channels. And that is what leads to this growth. The number of services, the subscriber base continues to grow very, very strongly. So you see 358,000 services by the end of the quarter, which is a 41% growth year over year. It comes from four different sources.

The mobile subscriptions is the one with the highest ARPU, revenue per month per user. And we have 255,000 mobile subscriptions. And we have those in nine markets. And we grew then with 53,000 year over year, which is 26% on that service. The premium activity platform is a true success for Explora.

That's a value added service that is on top of the mobile subscription plan that generates additional ARPU, but it's also sold as a stand alone service. The B2B subscriptions come from the cooperation with the telcos, where we have now surpassed 20,000 subscriptions. And we have the service fee, which is a vehicle to drive the further expansion of the conversion rate on the mobile subscriptions. So overall, net growth of 103,000 year over year. The mobile subscriptions, I would say Germany is a turnaround compared to one point five years ago.

Germany has always been the largest market for smartwatches. But we also now really see that we get service revenue from mobile subscriptions in Germany. Of the net growth of 52,000 mobile subscriptions year over year, 50% came from Germany. We also, as you can see, continue to work in the and grow in The Nordics. And also, I pointed out, Spain, which deliver strong numbers.

The service revenue, which is the effect of the growth on the numbers of services, of course, had a revenue growth of 29% year over year to $80,000,000 in Q1. We have always been very focused on that part in the Nordic markets. And we have said that one main objective is to grow also outside of the Nordics. And here you see the effect one year ago, Q1, it was 12% coming from outside of the Nordic markets. In Q1 this year, it's 20%.

So very, very solid shift of where the revenue comes from. Reflecting on the high growth in Germany, we have $8,500,000 service revenue coming in, in Q1 this year from Germany, and that's a 265% growth year over year. And Germany is now our third biggest service revenue market after Norway and Sweden. And the annual recurring revenue is $318,000,000 with 83% gross margin, so a very healthy business. The RPU, this graph tends looks relatively flat, but the numbers are important to pay attention to.

ARPU is the average revenue per user per month. We it comes from the connectivity part, the mobile subscription and the premium over the number of mobile subscriptions. We have had a growth in the Nordic markets of four year over year. That is equivalent to NOK 9,000,000 extra on the EBITDA, expands the margin. In the other markets, Germany, U.

S, UK, Spain and France, we have an uplift of NOK 11 year over year, and that is equal to NOK 10,000,000. So this shows that how important it is to work also not only on the number of sales that we do on the services, but also on the pricing. We also do an annual price increase on the existing subscriber base. We did that July 1, and we see that also contributes to that part. And it's also an increased share of sales on higher priced price plans.

So we see that the premium price plan has now an increasing share of the total mobile subscription plan numbers. Then over to the new and exciting part is the new products and services. This is the outcome of very, very hard work over many months. And we tend to simplify and say that we will insert a SIM card and that's it. There is a lot more behind it.

So we have now been working on preparing both the sales of Doro with Doro mobile subscriptions, but also the youth phone needs a subscription. So we have been setting up a total new infrastructure for those two products with these services. And it's a lot of work. It's a whole commercial background, which is about negotiating new tariffs, extending mobile agreements with the telcos that are behind delivering the service. It's a huge technical back end implementation.

And of course, the customer offering has to sit spot on. So we go live with the first markets in Q2, respectively for Doro and for the youth phone. And then we will deliver over the next quarters in the remaining markets. And we repeat this seven times for the Doro subscription and eight times for the youth phone, so a lot of work. That was Q1.

Then I will enter into going forward. When it comes to launching Doro phones with a Doro mobile subscription plan, we have been comparing to what the telcos have are doing traditionally. I've been in the telco business for twenty five years plus. So it's very much a game about pricing and maximizing the price plans. And it's also about lately, also a bit more in the direction of security.

And we know that Doros Foundation comes a lot from security, trust position. So when we develop the Doros value proposition, we pay attention to the safety and security aspects with services that will be delivered and added on as they are being developed and a fair pricing policy and very important for this segment, the customer service, which is operated in multiple channels but including the phones. So LoRa goes live in the first market in Sweden by the end of this month. And then gradually throughout the year, also be introduced in the direct to consumer channels. And thereafter, we will announce when we are ready with going into the retail channels.

We have a similar story for the youth phone. It's a bit different because here we get revenue from two different sources. The parental app that Sangio will demonstrate in a minute gives us service revenue independently of the if the phones are sold by Explora or our cooperation partner, HMD. So Explora will get a service revenue from the parental app already from June in all markets where the product is being launched. So June, we will launch the product in our direct to consumer channels.

We will start selling it also in all markets with the parental control function and we will monetize from that from day one. End of June, we will also introduce the first mobile subscription plan for youth then in Norway with the parental control functionality included in the mobile subscription plan. And that's also then what we will continue to roll out, that's the upper line, in the direct to consumer channels, both on the web and on Amazon. And then in retail, again, similar to with Doro, we will introduce this gradually in the different retail channels and the markets throughout the rest of this year. Thank you.

Sanjo, CTO, Explora: Good morning, everyone. I know if you see me on my stage, there is something new. I'm so happy to present youth. So like Explora is growing, children is growing. And also, unfortunately, there is a growing demand from kids watch to smartphone.

But lots of parents still want safety feature in the smartphone. That's why we come up with a youth phone. So most important thing here is not about parent control feature from the, smartphone, but important element here is partnering with the HMD or smartphone manufacturer that we can integrate into the system layer so that these day children is so smart, they somehow figuring out how they bypass the parent control feature. Even you can simply googling, how can I bypass family link from the Google? You will see lot of list.

Right? So that's the actual, situation. That's exactly why we're working closely with HMD to have a deep integration into the system so that we can prevent such bypassing parent control feature. With all that, we hope that we can open up 36,000,000 new opportunities in the market, and we already have lot of children from the kids' phone kids' watch to the smartphone that hopefully we can address those customers. And then how we actually support youth.

I'd like to highlight how we also grow from the one point zero stage to now. So as you can see, although we call it f one point zero, but there are a lot of platform and service behind, But the key idea here is agile approach, which means dream big, execute small by small. That's why we always adapting agile approach from one point zero, focus on kids watch as a starting point. In the 02/2000, we started introducing not only hardware but also combined with a service, such as a SIM subscription or premium subscription. Now we are in three point zero, which more expecting scalability and sustainability that I will explain more a little bit.

Here, now we are on three point zero. It is not about improving fancy user experience and UI. But, again, there are important improvement in a platform and architecture to support more new verticals from the kids watch and the smartphones and something new device effectively. And also the platform, we can introduce more complete different business model. Now we, as platform, supporting Explorer, but we can easily integrate new business come to the our ecosystem to introduce their smart device, such as PetTracker, as an example, or even we can license our application and platform for business partner, something like PowerByte Explorer or similar Intel Inside concept so that still we can rolling our single development, our app and platform, but we can create the pipeline to the many different customers.

So we call it multitenant strategy in our three point zero so that we can expect more scale effectively and sustainably grow. So that's where we are at the moment at three point zero. Now singing is believing always. So let me show you a short video demo. Here, you have parent app and the Fusion x one, which is TINS app.

So as a user, we have a location features like a safety zone, location history, but importantly, more more precise accuracy because of the we have a more power from the smartphone. So that's as usual, we have all the location feature as you can see here. And in the Teens phone, very simple user interface, but obviously, we'll improve continue adding new feature. As you see you can see all the report about screen and app usage for the teens and also parents. Now more very interesting feature about app permission.

So teens can actually explore all apps from the, you know, user stores. And then they click to download. Then this as soon as it's on the device, actually, it blocks the app, like as you see. Then immediately notify the parents to give a permission or not. Then you see the whole list of apps installed in the Teams phone, then you see SubwaySoft, then you can either okay.

I give a permission, then it automatically shown in the screen and that you can hide in a real time. And also, of course, you can control already installed app such as a snapshot here. So in a real time, you see it pops up and also you can hide it as well. Then, more feature like we already have a school mode where when children go to school, they cannot use the smartphone by school mode and also bedtime mode. So during the bedtime, they can't use the smartphone so you can control time.

And also app timer where you can actually individually manage how long children needs to use the app. So here, as you see, click the subway stuff, and then you can actually control how many hours you allow to use per day. So everything's is in, real time between the parent and the smartphone. Okay. Then we have a small demo station.

I know you really want to come and want to see it right now, but please wait for the stand to finalize QA, and please welcome to have a look. And now let me invite Julian to continue now senior Doro.

Julian, CEO, Doro: Okay. Thank you. My name is Julian. I'm the CEO of Doro. Sten, thank you very much for inviting me to be here today so that I can present the senior proposition that will now be a part of the the explorer group going forward.

Obviously, Doro is a business that's fifty years old. We are category leaders in the markets that we are present in. And there are seven core markets, the Nordic markets, Germany, France, and UK. The total size of that of of the available market is around 60,000,000 people, which we already, through the Doro brand, with its brand awareness, have a good connection with and there's a lot of trust in the brand. We target two different groups.

We're talking to not just the user, the senior person, but more and more our positioning is also going towards the family member that is supporting that individual. And we'll come back onto that in a little bit. At the moment, we've had a lot of focus on a new range of smartphones, which we've branded, Aurora, the Aurora range of phones. Again, we'll talk about that. And obviously, there's an awful lot of work going on at the moment as well to bring connectivity into our telephones.

So we'll talk about the insertion of SIM. So talk a little bit. We talk about internally now about Doro four point zero. You have a very stable business in Doro with strong sales of feature phones, very sleek back end of the business from an operational perspective. You can see that in our numbers.

But our job is now to transform our business into the next phase where we're going to more into two things that we've been focused on since I started in the business back in June. '1 is to really embrace the, the digitalization of society and help the elderly people manage that transition, which is very difficult for them. So that means moving into more smart devices rather than sort of and broadening from the feature phones. And then on top of that, we've actually had our own strategies looking at service propositions and recurring revenue. So it's very appropriate that we combine our forces going forward with Explorer, where one on one can become much more than just two.

Our vision and our mission, really, our purpose at the end of the day for Doro is enabling those with the additional needs to feel safe, connected, and then included still in society through easy to use technology. So we go the extra mile to deliver technology that is easier for people to use. So the innovation that we bring into the market is really being driven by three trends. There's, you know, within the social context, there's an aging population. Everyone knows this.

There's more people living alone because they want to live in their own accommodation rather than going into care. And as that population gets bigger, governments are struggling to cope with the the cost burden of that older elderly population, and they will pass that on in in the years to come and already now, but more and more in years to come into the generation below where there'll be more and more involved in looking after that group. So that's our job is to empower them, to help them look after the elderly people. Now to do that, we need to lean into this whole digitalization of services. There's also naturally people, that with the technology moving forward and the digitalization of society, if you want to bank now, park your car, whatever you wanna do, it's it's basically through a phone.

It's more and more difficult to do those things if you don't have a smartphone. So there were naturally less people choosing feature phones than they were before. So, again, driving our need to pivot our business into more digital devices. Then there's a human need. And at the end of the day, these are core needs that, you know, you look at Maslow's hierarchy of needs, theories.

There's a human need for contact and for support. Generational housing, just a hundred, hundred and twenty years ago when we all lived through many generations in the same place, we now don't have that ability to have that daily connection to look after each other, to share experiences. Now the digital devices help us do that over a broad, you know, miles, kilometers, different countries, but not if you're struggling with that technology. So again, our job is to help that bridge. And that's the dilemma.

That's the problem in the marketplace. The digital devices that are being developed simplify life. You can now do banking from your bed. Well, but not if you can't use the device. Now you go up to a glass wall in the high street, it says closed and moved online.

This is the frustration for many people. So it creates barriers for some, and that's our job. That's our purpose. That's our reason for being is to take those barriers away and enable those people that have lived eighty years on this planet or longer or even a little bit shorter and still give them the ability to partake in society and feel a valuable human being. That's our job, to develop meaningful tech help tech that gives these users peace of mind through easy to use devices.

So we model ourselves. Our model going forward is looking at three areas that we bring together with Doro in the middle. Our tech is always easy to use. That's our challenge. For the user, when we're talking about the user, we make technology that is simple to use.

But it's there to develop or to bring help to the individual. It aids them to be a part of society to keep connected. And also, somewhat now, but more in the future, we're we're we're also looking at health tech and how we can enable that. Now at the moment, some of that can even be peace of mind. You look at the button on the back of the phone, which is basically a call for help button and assist button.

That gives you peace of mind. It gives your relative peace of mind that should anything happen to you, help is just a touch of a button away. But this is an area that we're also looking into and seeing how we can exploit the opportunities within health health tech. Although at the moment, we've laid very clear boundaries saying that we're not gonna go into medical device. So that's up until that boundary, but not the other side.

So with that, as we're moving not just new products through, but we're reinvigorating and reinventing our business to be more supporting seniors through into the digital age. We've launched our first phone this week. On Tuesday, we launched our new range of smartphones, which we've, as I said, launched under the the name Aurora. We have a couple of devices that should you be interested after the presentation, you're welcome to come and have a look at. What's different?

Well, these are simple smartphones. What you can see just from this picture, three devices, the Aurora a 10, a 20, and a 30. You can see this is a smartphone with physical buttons. It was a very long time since anybody saw anything vaguely like that. If you look at the a 20, it's even a foldable phone.

So it's a clam a clam phone. You don't see again smartphones like this. But for an elderly person coming from maybe a sort of a feature phone or with, less tactility, you know, less grip, These things give reassurance that it's okay and it helps me bridge from simpler devices into something that at least is more complicated than what they use today. Now clearly, not just the the the sort of the format of the phone, but for us, the other there are a couple of other points that are super important. And obviously, as we age, all of us, probably everybody in this room, 45 upwards, sorry to say it, but we've all lost somewhat of the hearing that we had when we were 20.

If you go to rock concerts, when you're in the you've probably lost even more. Now what we know is that, when you when you launch a new phone, there is a profile, a sound profile that you need to, have tested, and that gives you certification of the phone that you're allowed to launch it. What we found out is for the most people 45, not even seniors, that's not the optimal sound profile. So we have developed our own sound profiling and that is, should we say, bringing up certain frequencies so that it's easier to get a crisp, clear phone call. And we've called that DoroClearSound.

That's a trademarked piece of or brand asset. And you'll also see what's unusual. If you pick up any of your iPhones, etcetera, and look where the speaker is, it points down. Okay? So if you are doing that and you're having a phone call, it's pointing down.

As you'll see, here, in this instance, the phone we have the speaker pointing at you again. So we make out we have to go that extra mile to develop phones that are perfect or as close to perfect as they can be for our target audience. We don't just take phones off the shelf and put a Dora brand on it. We develop them specifically for this target group. Obviously, it does the basics of keeping people connected with good cameras, both front and back, very clear quality on the screen, and then obviously the ability with the sound to have a good interaction too.

This all comes together now in a holistic, what we call ecosystem, where we have a consistency in design across our products. You'll see here, you've got this like green ring on the back of every phone. That's our Doro secure button, which is another piece of trademark. The button, it's programmed with an app. It's programmed to five of your relatives or you program it to five of your relatives.

Should anything happen as an individual and you need help, you press that button twice. It calls, the microphone comes on, so the and the and the the speaker comes on. It calls those five people whoever phones up says, hey. What's up? Can I help?

Obviously, GPS in the smartphones enables you to get a location on where that person is and go and help them. So is this for us is a very key design feature that we've now brought everything together with this green dot. You can see this is our video doorbell, which also has a green LED illumination around there, so it really links the brand story together. What's different about our video doorbell? There's lots of video doorbells.

When you press that button, obviously, it comes up in your smartphone as an early person. You see that and you say, look, this is personal on the other side of the door that can maybe only be a couple of meters away, and you feel really uncomfortable about answering that. And you can either go and hide and say, not home and not answer because at least you've got the power to do that. You don't have to look at who it is through the doorway. But also, you can actually press a button on the phone, and your relative can pick up that and take that discussion through the microphone on the door and tell them to go away, or even press a button, and it sounds an alarm and scares them the hell out of there.

That's unique for a video doorbell. So, again, it's about trying to understand your target audience, and developing products that go the extra mile. We don't do the just the generic products that everybody needs. We have to work harder because we've got to meet additional needs. That's what I talked about a bit.

We're there to solve the additional needs. So it's we go further. So this is what we do this week. We launched, as you say, the door the Dora Aurora range of phones. That was, I think our project manager said, five hundred and thirty one days of project in the making, and we got that over the line on Tuesday.

We're very, very proud of this. I think it's heads and shoulders of the best smartphone device or platform that we've ever put out there. It's supported by a range of, accessories, which bring additional revenue to us, additional margin to our retail partners. And we've also backed this. You'll you'll see, should we say, a an advertising campaign, little bit of tongue tongue in cheek, bringing to life, the dilemma of, most of us when we get a new smartphone, we give our parents our old one.

And in that moment, you do two things. One, you would disenable them and disconnect them often from society, not everybody, but many of them. And the other thing you do is you make yourself IT help desk for the rest of your life. Don't do that. You make a smarter choice, give them a dorah.

That's it. Thank you.

Sten, CFO, Explora: Thank you. So I will do my best to wrap up in a few minutes. We are over time, but I hope it was really helpful for you to go a little bit deeper to see where we are. So just to combine all this together, as Sanjio, Julian, Chettel and Knut have presented, we are now really taking this big step to building the number one platform for connected families. We have a series of products now, and Julian just showed us we are launching even more.

We have a global IoT connect platform, nine MVNOs set up around the globe. And as Sanjio presented, we are launching a new Guardian app, only to support our branded and sold product, but potentially to tap into multiple other products, not even being sold by us, but still generate revenue. Although we have all these plans and ability to scale going forward, every single day, we wake up with one clear goal, to provide 1,000,000 subscriptions within the next four to five years, as we said last fall. And we are now extending from being able to have executed 350,000 subscription in one category, and we are now growing with the strategy to now outperform in youth and senior to drive that 1,000,000 home. As Knud presented, we have become a significantly larger company, scaling from 117,000 in Q1 to three and forty thousand in Q1 this year and become a significantly larger scale of the company, 1,700,000,000.0 trailing twelve month worth of revenue.

And as we have explained to some of you investors in one to one and in our presentation, not only do we have a fantastic starting point of our financials as of right now, but we have one single huge opportunity, as Julian just presented, with the effort we have now been doing with setting up our MVNO, preparing for seven new markets. As we have said, if we are able to have one out of every 10 phones that Yulan just presented, one of every 10 to activate our Doro Connect with all the benefit that can bring to the table. One out of 10 within the next two years will add roughly 300,000,000 additional EBITA to our roughly EUR 200,000,000 where we stay today. Fantastic business opportunity, fantastic team, and we have a very clear target on where we are going. Outlook stays the same as from last quarter.

As we said, we will introduce the first youth product as we presented today end of this quarter. We will continue our annual year over year growth from the kids category. We are introducing the first SIM cards within Doro end of this quarter, and we will focus very hard on increasing our service revenue and our increase of EBITA and EBIT end of year and secure the path, as mentioned, to 1,000,000 subscription. With that, Knut, Chettle, you can join me for the Q and A. I guess there are a couple.

Let me start with some from online, and then we take some live from the audience afterwards. And interesting first question. Take this to you, Knut. What will you do with all the cash in your balance sheet?

Knut, CFO, Explora: Well, it could looks like a lot of cash in the balance sheet, but it's very important for us to have a very strong foundation and the flexibility that is needed to further grow the company. We have a loan that is close to 1,000,000,000, and we have a cash position of NOK $535,000,000. And I think that's a healthy situation. And of course, what we are doing with the cash that we have on hand is that we're making sure that, that's put in the best possible interest level as well. So it's good to have cash and the flexibility.

Sten, CFO, Explora: All right. One more on that point. What are the total one offs related to the acquisition?

Knut, CFO, Explora: Well, it's two pieces. We have some that actually occurred last year. We have about NOK 6,000,000, 7 million that is linked to the legal cost, due diligence of Toro and so on. And then we have NOK 11,000,000, and that is OpEx in Q1 that we have mentioned a few times before. And then we have the 30,000,000 in cost linked to the loan arrangement.

So in total, it's about NOK 50,000,000.

Sten, CFO, Explora: And then one for you, Chettle. As we mentioned, there are change in the sell in versus the sell out in Q1. So the sale of kids units in Q1, sell in versus sell out, any comment in that regard? Chetan, can address Yes, this

Chettel, Operational Lead, Explora: is an important question to address. So started with presenting that the sell out demand from the end consumers is stable and slightly growing. So that's important to note that the underlying demand for our products is stable and growing. We have a combination of direct and indirect channels, and the indirect channels makes up for the majority of the volume. That means that we sell to a distributor, the distributor sells to a retailer or a telco and that partner sells to the end consumer.

And that sell in fluctuates quite a bit. And the largest customer that we have has end of the financial year on the March 31. That means that they minimized their inventory at the same date as we have end of the Q1 quarter. So that is basically the main explanation for it. When it comes to how it looks for Q2, we have we are going to catch up that volume in Q2.

We have huge, let's say, reserve of products that we are going to deliver this quarter. So Q2 and the Q1 and Q2 combined looks all right.

Sten, CFO, Explora: Good. Let's see. Okay, easy one. When and where and how can you buy the youth phone?

Chettel, Operational Lead, Explora: Yes, a lot of channels. We have the full, let's say, distribution network from Explora, but also HMD sells 40,000,000 devices a year, also sells directly to a lot of Telco and retail partners throughout Europe. We launched the product on the June 5. It will be available when it comes to the Explora network on our direct to consumer channels, which is the web and also on Amazon. And then you will see it in different retailers throughout Europe.

Sten, CFO, Explora: All right. What is the current holding stake in Doral? How far are we from 90%? Or does that at this point affect any practical reason or practical executions?

Knut, CFO, Explora: Well, as of today, we are on SEK 80 9 point 6 1 percent of the holdings. We are still continuing to buying the shares at SEK 34 per share. And that's the price that we have offered to the shareholders, and we continue to buy at that price. So there is no reason for us to buy shares at a higher price. There is no practical implication on this beside that until Doro that we have acquired 90%, Doro is continuing to be listed in the stock exchange in Sweden.

That's the major practical impact of this situation. But we have the funding for the transaction, so that's that part is good.

Sten, CFO, Explora: And one more related to the sell in units in Q1. I think we just addressed that, but please comment how do you see the development. You can just repeat that one more time.

Chettel, Operational Lead, Explora: Yes. Now we see us in Q1 stable over the last three years. We see an increase in Q2 compared to last year. As I said, we have a breakthrough in Spain. We are also new information entering into Canada because of the situation in The U.

S. So we expect a slight growth.

Sten, CFO, Explora: Will our app be included in the Doro phones? Interesting question. At this point, no, but well observed. I think that was the key questions from live or online. Any questions from this audience?

Well, I know, just start. Go ahead.

Helmut Gore, Analyst, ABG: Morning. It's Helmut Gore from ABG. A couple of questions. First, on the gross margin, was very solid this quarter. There was a provision in the Doro segments.

Can you say what was the gross margin if we exclude that provision? And how will the introduction of the Aurora line affect the gross margin in the Doro segment going forward or the senior segment going forward?

Knut, CFO, Explora: So in this case, we have to since Doro is listed on the exchange in Sweden, Doro needs to answer this question, and you can find what you have in the Doro report. We are not allowed to dig more deeply into that question. I'm sorry for that.

Helmut Gore, Analyst, ABG: And the second part of the question, how will the Aurora line affect future gross margins? Or how what do you expect to the gross margin development in the senior segment going forward?

Knut, CFO, Explora: So what we have seen, if you look at the Doro report, they have had approximately 45%, forty six %, forty seven % margin, a little bit higher in Q1. But from outside, I think it's fair to say that we are on that level.

Helmut Gore, Analyst, ABG: Thank you. Very clear. And on the new youth product line, can you say I know it's still early days, but can you say have there been any initial response from retailers, etcetera, about being able to place the phones in various retailers? Can you say something about the initial response?

Chettel, Operational Lead, Explora: Yes. You will see it soon listed in the Nordic Region with demo tables. We have a lot of demo tables with the largest retailers. You will see it there. You will also see it in the standard phone ranging tables in the section in the retailers.

Sten, CFO, Explora: So yes.

Helmut Gore, Analyst, ABG: Perfect. Thank you very much.

Sten, CFO, Explora: Anyone else?

Petr, Analyst, Sberbank Wall Markets: You. Petr from Sberbank Wall Markets. Just a follow-up, Baseline's question. We have a representative from Dore here. So would it be possible to answer the gross margin question?

Knut, CFO, Explora: I think this is the Explora presentation, and I will you need to refer and ask Dore directly when they are back in Sweden.

Petr, Analyst, Sberbank Wall Markets: Okay. And secondly, just on the devices for kind of old Explorer. Given that there was a pretty decent miss in Q1, but you say that it's kind of picked up again in Q2. Can you say something about how you track towards the 15% growth, let's say, year to date compared to year

Sten, CFO, Explora: That's why we try to be very clear on that. First half year, second half year, we expect to be aligned with what we said with that annual growth. And that's also why Chetel emphasized that what we see as we are becoming larger, we are getting more product into our store, we are getting more retailers and distribution. The fluctuation between the quarter with sell in will potentially change a little bit more. That's also why we will give the market even more detailed information about the sell out in the market.

As long as the sell out in the market is strong and even higher, that will also be picked up in the sell in eventually, but it might fluctuate more over quarter. So we've been very precise. We see the same growth as we have expected. There will be slightly more change potentially in sellout. But as long as we keep very strong sellout and activation, the market moves exactly how we expect, and we stand by that growth.

Chettel, Operational Lead, Explora: I think it's also important to underline what I showed on my second slide, which is the share of watches being activated with the service. So it's not only the number of smartwatches, which is the foundation for the growth of services, it's also the share of smartwatches being sold with a service where you see rolling twelve months is stable going up in the right direction. So that's it's also a driver for the service revenue.

Petr, Analyst, Sberbank Wall Markets: And just a final question with regards to the price ARPU difference between The Nordics and the rest of the world. Is there still same gross margins between those two markets? Or is it gross margin differences

Chettel, Operational Lead, Explora: as can't say that directly from the top of my head. You see there is a price difference, which is clear. But it's just like I mean also the cost side is much lower than we compared to the Nordic market. So both the revenue is lower, but also our cost is significantly lower. But I can't I would have to look at every specific market to answer that correctly.

Petr, Analyst, Sberbank Wall Markets: All right. Thanks.

Sten, CFO, Explora: Anyone else? People are calculating, making comments. If that was all, we would like to thank you, everyone, for such a big show up today. So we will hang around and be able to speak with everyone individually. Thank you.

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