Sensirion Stock

Dear ladies and gentlemen, we would like to welcome you to Sensirion Holding AG conference call on the results of the half year 2026. From Sensirion, Marc von Waldkirch, our Chief Executive Officer; Martin Wirz, our Chief Financial Officer; and myself, Lars Dunnhaupt, Director Investor Relations, are present. In addition to the press release we issued earlier today, we will be referencing a presentation during today's call. The PDF of this presentation can be downloaded from the Sensirion Investor Relations page.

As we begin, please note that the conference call is being recorded and that all participants are set to mute. During the conference call, we will be making forward-looking statements regarding future events or the financial performance of the company that can involve certain risks and uncertainties. The company's actual results may differ from the projections described in such statements. So please take a minute to read it. Let's take a look at the agenda.

Marc will begin today by covering the highlights and business review of the half year results 2026. Next, Martin will comment on the financial performance. Martin will then turn the call back to Marc, who will address the outlook 2026. Afterwards, Marc and Martin will take your questions. I will read out the questions. And with that, I would like to turn the call over to Marc.

Yes. Thank you, Lars. So also a warm welcome from my side to this earnings conference. It's great to have you with us this morning. Let's start with a short executive summary. I think the headline today is simple. We continue to grow in a pretty volatile environment, broad-based and on the back or on the base of a pretty strong first half of 2025 as reference base. Revenue came in at CHF 179 million. This is an up of 7% in local currency, minus 3% in Swiss currency. The prior year period was highly influenced by the front-loading effects in the A2L ramp-up scenario, which normalized in the meantime. And this high reference base makes also the continued growth even more encouraging.

The growth once again is based on a pretty broad base. On the one hand, that all the 4 end markets contributed to this growth with a particularly strong momentum in medical business, in distribution business, but also consumer markets. The softer development in the U.S. or in Americas in general, in this region reflects the strong prior year base from A2L sensors and could be offset by other regions. On profitability level, we held the profitability EBITDA level of healthy 19.5%, supported by an expansion in gross margin to 52.6%. A particular highlight this year is the improvement in net income, which has grown by roughly 80%, driven by a normalized financial result.

Operating cash flow came in at CHF 34 million, an up of 20% compared to last year's result. And on the back of this strong first half year, but also backed on the strong momentum looking forward, we have raised our full year guidance for 2026. I will comment it in details at the end of the presentation today. I think all in all, we can summarize the ability to keep growing in a pretty volatile and demanding environment and off a high base is the fundamental message I'd like to share this year with you. And this also underscores the market position we have, the strong technology platforms we have, and the close engagement with customers, which was the base to record these figures.

First, I'd like to go through all the 4 individual markets to comment them in details. Let's start with automotive. Automotive market delivered strong growth this year, up 11% in local currency despite the structural challenges in the Western automotive industry. The existing business or the existing applications proved resilient. But the more important message strategically is the fact that the growth came from the new growth fields, mainly or in particular, from the first launch of battery management systems for EV cars with a larger European OEM.

Apart from this thermal runaway detection system, we're also working on a lot of other RFQs either for this application, but also in all the other applications we presented during the Capital Markets Day related to our growth fields in automotive on the one hand side, also refrigerant leakage or the new megatrend of autonomous or partially autonomous driving. In Medical, medical market performed as well, pretty strong with revenue of CHF 28.7 million, an up of around again, 10% in local currency, even up of roughly 39% compared to H2 of 2025. Growth was mainly driven by our established applications of CPAP and ventilation application.

Part of this demand might also be reflecting precautionary inventory buildup from our larger customers seeking to strengthen their supply chain security in these volatile times. Strategically, we are progressing well in all our growth fields as presented in the Capital Markets Day, namely, in particular, about smart gas sensing and medical, about resuscitation applications, about capnography or also about advanced respiratory diagnosis.

Coming to the industrial markets. Industrial market is a pretty broad, diversified market. This market held the prior year revenue in local currencies with a plus of 1%. This is against a first half year of 2025 that was heavily influenced and benefiting from these front-loading effects in A2L. A2L in the meantime is progressing as expected. So we have this kind of normalization, and it's moving forward as planned as also presented in the last earnings call in March. So in A2L, we could retain our market leadership worldwide, while we are progressing in the next gen of leakage sensing for HVAC systems, that's the A3 story, which is more hitting the markets in Europe and Asia in some years from now.

The normalization of A2L could actually be offset completely by other growth fields, namely the gas, especially the gas chromatography with Qmicro on the one hand side, but also pretty strong growth contribution from smart gas metering in this industrial field. Next slide is more for your reference. This is the very same slide as we have presented in details last time in March. It's just to give you reference again about the upcoming dynamics and momentum in the A2L market after the front-loading back last year, the normalization phase now, this market is translating into a robust solid market with a moderate growth anticipated for the next couple of years.

But there is no change in this slide. It's more for your reference. Coming to the last of our 4 end markets, that's about consumer. Consumer, a highly fragmented market, posted strong growth this year with 45% in local currency, up to CHF 12.3 million. This was driven primarily by a very strong demand from our distribution channels across all the 3 regions, Asia, Europe, but also Americas. There, we have a very broad customer base, which is also of strategic value in order to seek for new solutions for new lead customers, and this broad base of distribution market is a significant asset for the company looking forward.

Portfolio-wise, we were also supported by the new miniaturized CO2 sensor, which has a good traction in the distribution and the consumer markets. Before going to some kind of a strategic recap, I'd like also to answer probably very likely questions about Lumiphase. So from Lumiphase side, there is no significant updates to be shared today. They are still fully focused on fixing the last open technical issues they have to do, especially about stability of their technology. And on the other hand, they are still continue to deepen their relationship and collaboration with leading customers in order to tackle this challenge of going up to the next bandwidth in data communications.

But there is no strategic update, which is significantly different to what we have shared last time back in March. Then a short view going back to the strategy. We had our Capital Markets Day in April this year. I just like to some of the slides, they are the same as we have presented there in order to give you a short recap of the strategy. We have presented our ambitious growth strategy under the banner of we measure gases precisely, reliably and at scale. Sensirion today is, at my knowledge, at least, the company with the probably most comprehensive portfolio of technologies to measure small amounts of gases in any kind of application.

And that's the unique edge our growth strategy looking forward is actually based on. On top of that, of the technology portfolio, we do have deep relationships, long-term relationships with important leading customers in all the fields we are in. And secondly, we have also a deep application expertise in-house to combine technology with the problems of our customers. That's the base of our growth strategy. The market we are in and we are looking for is smart gas sensing, a fast-growing multibillion market driven by secular megatrends such as the health issue, the demographic changes, aging society on the one hand side. We do have the climate and environmental protection.

We have energy efficiency as a megatrend. And last but not least, also the regulations and norms in order to increase safety for people. All these megatrends translate into mission-critical applications. They are coming up in this field of smart gas sensing, from breath analysis about patient monitoring, about the emission of hazardous gases or the leakage of critical gases in any kind of application. And this is exactly the market we are fully targeting at the moment. And in this market, it's not just about components; it's also all the way up to full solutions to solve the full problem of our customers' sensor challenges.

Our vision in this market is clear. Our ambition is to become market leader in this high-value smart gas sensing markets by 2030, solving and focusing fully on these mission-critical challenges as a trusted partner of our customers in regions. To do so, we have defined 4 strategic pillars. On the one hand, it's about dominating the core, the core of flow applications, but also environmental sensing applications and to even expand our dominant position in this field. Additionally, the second pillar is about building up leadership -- market leadership in the leakage market, a market which is growing fast, which is coming up at the moment.

A2L is just a starting point to do so. It's about A3, but also battery management is at the end of the day, a leakage detection application. Third pillar is about expanding to medical and industrial solutions, always focused on mission-critical applications as we have presented in the Capital Markets Day. And last but not least, all these solution-oriented innovation-driven application is not a value if we cannot strengthen our resilience in this volatile environment.

Therefore, also the strategic pillar #4 is about the increase of resilience in our supply chain in the way we operate our business model. This is the ambitious growth strategy we have. It's not just a dream. It's built on concrete growth fields we have presented you in detail during the Capital Markets Day. All of them have a significant growth potential for the next couple of years. And it's important, it's not just about the far out future.

Some of the growth has already contributed to the first half of '26 financial results, in particular, about battery management, but also about gas chromatography with our company in the Netherlands, Qmicro. So it's not about future. It's also about reality today, the first contribution are already recorded from our growth strategy. Saying that, I'd like to hand over to Martin to dive into all the details of our financial results.

Thank you, Marc. And also from my side, a very warm welcome to the audience. Over the next few minutes, I will take you through our financial performance for the first half year of 2026, the top line and the development by market and region, our margins and profitability and how this translates into cash and future strengthening of our balance sheet. Marc will then come back to walk you through our raised outlook for the full year. Now let me start with the headline numbers. We delivered revenue of CHF 179 million, up 7% in local currencies. In Swiss francs, that's a reduction of 3% as the strong franc continued to weigh on reporting figures compared to half year 1 '25.

A theme you will see running through the presentation today. But importantly, the underlying momentum of the business is clearly one of growth. Profitability remained healthy. Our gross margin improved to 52.6% from 51.5% a year ago. And the EBITDA margin held at 19.5%, essentially stable versus 19.8% in the prior year period. And cash generation was a real highlight. Operating cash flow rose 20% to CHF 34 million, leaving us with a cash position of CHF 83.8 million at the end of June. So growth in local currency, margins held and strong cash conversion. To briefly recap market development, growth was generally broad-based.

All 4 end markets grew in local currencies. You heard it from Marc, Automotive was up almost 11% in local currency despite the well-known structural headwind in the Western auto industry, thanks to growth with new applications. Medical grew close to 10%, driven by strong CPAP and ventilation demand and consumer as a standout is up 45%, carried by the strong distribution demand across all 3 regions. Our largest market, industrial at 54% of revenue held its prior year level in local currency, up around 1%.

That is a strong result. When you recall, first half year '25 was benefiting from a significant A2L front-loading effect as per before and driven by growth in other industrial applications, smart gas metering and gas chrom was mentioned and also the strong distribution business offset the expected normalization of A2L. By region, APAC and EMEA both grew double digit in local currency, while Americas declined, also reflecting the strong prior year A2L base. So the picture is one of underlying momentum with FX and A2L comparison masking the true strength of the first half year '26.

Turning to the next slide. This slide shows the margin profile. Gross margin was up 110 basis points to 52.6% on the back of operating leverage, favorable product mix and our continued efficiency programs. That improvement absorbed both currency and elevated raw material costs. The margin strength is what allows us to keep investing. R&D intensity was 18.4% of the revenue, and this is fully in line with our midterm innovation strategy. SG&A was 20.9%, reflecting targeted investment in our customer-facing functions. In short, strong gross margin is comfortably funding the innovation that drives our future growth fields.

On profitability, EBITDA came in at CHF 34.9 million, a margin of 19.5%. That resilience reflects gross margin expansion just before elaborated and OpEx discipline, while we continue to absorb FX and higher material costs and keep investing in growth. Below EBITDA, the net profit rose 81% year-on-year to CHF 18.9 million. The main driver there is a normalized financial result. The prior year period was heavily impacted by foreign exchange losses from the strengthened Swiss francs. The equity accounted contribution from Lumiphase came in, in line with our expected run rate at the comparable number than last year.

Net working capital was stable at 33.5% of last 12 months revenue. Inventories came down as A2L stock level normalized and supported by active inventory management, while we preserve the flexibility to serve the demand of our customers. CapEx was elevated and in line with our communicated plan. It reflects the continued investment in manufacturing capacity here in Switzerland, including CHF 8.2 million of growth CapEx for our second cleanroom in Stäfa, which is progressing on schedule and within budget. Depreciation and amortization are rising in line with our investment cycle.

Turning to the balance sheet. The highlights of the balance sheet. Our balance sheet remains a real source of strength. Net cash increased 14% to CHF 81.7 million compared to the end of 2025, funded entirely by operating cash generation. Our equity ratio stands at a very solid 80.8%. This gives us substantial financial flexibility. Our capital allocation priorities are clear: organic growth first, then capacity expansion and selective M&A while maintaining a conservative leverage profile over the cycle. In other words, we can fund our ambitious growth from a position of strength.

Finally, the cash flow statement puts this all together. Operating cash flow was up 20% to CHF 34 million as a result of the improved profitability and disciplined capital management. The investment outflow of CHF 23.4 million reflects the capacity expansion on one side and capitalized development expenditure. That leaves free cash flow of CHF 10.6 million after the elevated cleanroom investment. And crucially, our growth investments remain fully funded from operating cash flow with the net cash position still increasing. Free cash flow conversion of around 30% will normalize once the cleanroom program completes.

To summarize, with a broad-based growth of 7% in local currencies across markets, margin held at a high level, net profit up substantially and the further strengthening of the balance sheet with 20% higher operating cash flow concluded a strong half year 2026. And with that note, I would like to hand over to you, Marc, for the outlook for the remaining year and the increased guidance for 2026.

Thank you, Martin. And before giving you the chance to ask questions, a short comment on the raised revenue guidance for 2026. So based on the strong results of first half of the year, but also looking forward based on the continued momentum we see in the market for this year, we decided actually to increase our revenue and also profitability guidance for the full year 2026. We are fully aware that the environment is still and will remain volatile and challenging. On the other hand, our broad-based end market approach, but also the market diversification supports and continues to support the resilience we have in these volatile markets despite all these macroeconomic and FX headwinds.

At the same time, we see that our growth initiatives broadly distributed across all the markets, across all regions will gain traction or are gaining a traction at the moment already and are more and more contributing to the results. And on the back of this analysis and assessments, we came to the conclusion to increase our revenue guidance from CHF 335 million to CHF 360 million, which was the range in March, to CHF 345 million to CHF 365 million. This reflects a growth of 8% to 14% in local currency compared to last year's full year results. And as a consequence of that, also to expect the EBITDA level to be at the upper half of our range of mid- to high teens.

This underlines both the resilience of our business, but also our confidence in continued growth for this year, but also looking forward to the next years to come. With that, we'd like to close our presentation of today's results and give you the chance to ask questions. I'd like to hand over to Lars to moderate this Q&A session.

Yes. As I said before at the beginning of the call, please use the Q&A tool in GoToWebinar and submit your questions and give you a little moment to submit questions. Currently, I didn't receive any questions. I still see no questions. I'm looking here in the room. Okay. I think let's wait another minute. Maybe then some questions come in. I think, apparently, Marc and Martin have done a very good job and does it work? First question, could you please remind us of the total amount of CapEx for the new building and its spread over the years?

Yes, I can comment on that. Total CapEx is around CHF 40 million spread over this year and predominantly next year, about in the same amount for half.

Next question is on sales. What are the swing factors from the lower and upper end of the sales guidance?

Well, I think at the end of the day, we have to be realistic that we have now a range of, I think, CHF 20 million only. So this can be influenced by 1 or 2 bigger orders from some customers and also their inventory management. So at the end of the day, it's not modeled in a way that we say, okay, if this happens, then we are ending at the lower end. And if that happens, we end at the higher end. It's more about the pretty large amount of different customers coming in and the dynamics in the market at the end of the day.

So there is not a strict scenario A and the scenario B. I think this range of CHF 20 million today, looking forward for the second half of the year is more reflecting the volatility of the market and the inventory management of customers, whether they will put the last orders in December again or whether they are going to push them out to next year's demand for January, and this is reflected by the CHF 20 million range.

Then there's a question on Lumiphase. Could you please explain the results of the equity accounted investees?

Yes, that's basically their run rate since they are now heavily in the R&D side, that's basically the cost base on our share of the company.

So we hold almost 50% of the shares. Therefore, it's almost 50% of the loss of the run rate loss of Lumiphase. We have to reflect in our financial results.

Then another question related to Lumiphase. Could you explain again the issues, the challenges around Lumiphase?

Well, there are -- I don't like to dive into a very technical discussion because it's pretty challenging to understand the technology behind. But at the end of the day, I think that's the normal way we have to go through with a new technology to pre-apply for one specific demanding application. That means the technology is so-called BTO layer, a barium titanate oxide layer, which can manipulate light that works. That can manipulate light, it can also manipulate the light fast enough in order to reach this level of bandwidth, that's a good message.

On the other hand, going forward, you have also to fix a lot of different issues, process-oriented issues in order to scale it up to higher volumes, but also on the other hand, stability issues in order to keep the performance of the material even in very challenging environments, high temperature, long operational run times and all this stuff. This is exactly what happens now. We are pretty used to that. So each new sensor, you can take the CO2 sensor, but also flow sensor, humidity sensor, all of them underwent through the kind of process that, first of all, sensor works.

It can measure humidity. In this case, with Lumiphase, it can manipulate light, but then you have to go through another phase. It means to fix all the issues that the performance can also be kept even over the whole time of operation and even in pretty challenging environments. And this is exactly what happens now to fix all the stability issues and there, not yet all issues are fixed.

They have -- we have actually to go step by step to fix all these minor but also major parts. And this is actually the job they are doing today. In parallel, the engagement is continuing to talk about and to design the applications to check and to validate the performance of these chips in the very application of customers' product. This is in parallel progressing well with customers.

Next question is twofold A2L. Can you provide a rough run rate of the A2L sales in H1 and H2 in absolute terms? And then what are the main developments you are expecting for H2 2026?

Well, so as usual, we are not going to disclose any product-based revenue split also in order not to give our competitors a good chance to analyze Sensirion. So it's also kind of a competition. The reason behind them not to disclose this application of product-based revenue is the competition in the field. That means we cannot disclose this. What I can share with you is, again, as illustrated on Slide 9, I think it was Slide 9, that -- it doesn't matter.

You can refer to the slide in your own material that we had the first phase of ramp-up back in '25, H1 '25 with the front-loading effect. That means all the customers they have ordered more than they could consume at this moment in order to fill up the whole supply chain in order also to mitigate risks, ramping up risks, but also supply chain disruption risks. Afterwards, H2 of 2025 reflected the normalization kinds of destocking in order to stabilize and balance out this supply chain situation.

And now we are translating more and more in a stable -- a stable business, where at the end of the day, it's a kind of we are delivering what the customers are consuming in their business because there are no front-loading effects anymore, but also no destocking effects anymore. And looking forward, we have this kind of moderately growing business based on the general increasing demand of HVAC applications in U.S. This is the non-absolute, but at least relative development we anticipate for A2L for development in the second half of the year.

I'm not sure whether the word development is more referring to the market revenue development or more the R&D development, but some words about the R&D development, the R&D is now fully focusing on the second generation of A2L in order also to remain our strong and defend our strong market position. And in parallel, we are working heavily on the A3 solutions for the other markets in Asia and Europe to come in, hopefully, in the next couple of years.

Next question is on auto, the EV battery management solution, which was mentioned for a big German OEM, is that an exclusive solution for this OEM only? Or can it also be designed in with?

Yes, definitely. We like also to bring that into other OEMs. I'd like to refer to one slide we have shown you during the Capital Markets Day that's our go-to-market strategy. Whenever we are going into a new application, a mission-critical application, we like actually to look for a leading customer. We can go through this process. We can also learn about the application. And afterwards, we like to broaden up our field by approaching all the other typically top 5 manufacturers in the world. And we are coming back to the EV application, we are exactly in the second phase.

It means we started up with a lead customer, and now we are rolling up the field by reaching out and getting engaged with other leading OEMs in this field, and we are already in discussions, and there are also some nominations on the table for the very same applications, but not yet launched, and we cannot disclose names of these OEMs due to some also agreement, NDA agreements we have signed with them we like to respect. But it's definitely our focus, strategic goal to bring that application into a broader market and at the end of the day, also to position Sensirion once again as the market leader in this newly emerging application.

Next question is a consumer question. What drove specifically the growth in the Consumer division? Is that related to the sales to IKEA?

Once again, we cannot comment specific business fields or even customer developments. But in general, I think once again, consumer market is heavily driven by distribution business and distribution at the moment is extremely strong across all the 3 regions. So the main contributor to the strong consumer business is actually is coming from the distribution markets from U.S., Europe, but also Asia. It's based on the environmental sensors primarily on the one hand, humidity, but also all these kinds of environmental nodes, particulate matter and so on. Therefore, IKEA is a good example of this kind of application, but it's not directly related to IKEA.

Next question is on FX. Which currency explains the 18% FX impact on the consumer sales? And how is this developing in the second half 2026?

I think the forward-looking statement FX is like a rolling dices on that. We definitely have most revenue in non-Swiss francs or -- and they're predominantly U.S. dollars. So that's -- and if you compare the base compared to last year, that's where we also have the biggest changes in U.S. dollar, Swiss francs FX pairs.

Next question is on Medical. How much of the growth in Medical was related to inventory buildup? And is the revenue expected in Medical expected to be lower in the second half of the year?

Well, the first question, that's hard to assess and difficult to assess. It's not a significant portion. I mentioned it before that a part of the dynamics might also be driven by inventory buildup with our customers to secure their supply chain. This is -- cannot be boiled down into clear figures because it's more a gut feeling because medical market is not so volatile typically. That means if you have short-term increases of demand, it might also -- it's a pretty high likelihood that it comes also from inventory management, but we do not have a clear picture on the inventory of our customers.

I think a significant portion is definitely also consumed by the customers because medical is going forward pretty successfully. The second question was about -- can you help me again? It was not just about how much comes from inventory management, but there was about second half of the year. All in all, I expect to be on the more or less same level as in the first half of the year.

Good. Thanks a lot for all the questions. I think thanks for looking into our results and showing interest in this call. I think I see no more questions right now online. And with that, I would like to thank a lot for your interest in our results call. And I would like to close the call. Thank you very much.

Thank you. Have a good day. Bye-bye.

Bye.

Good morning. Welcome. Dear ladies and gentlemen, welcome to Sensirion Holding's Investor Day 2026. My name is Lars Dunnhaupt. I'm the Director of Investor Relations, and I will be your host today.

Before we begin, please note that the event is being recorded. I'm pleased to also note that we will be taking pictures from the presentation area and the product demonstration area.

Let's take a look at today's agenda. Moritz Lechner will open the session with a welcome address. Then Marc will provide an overview of Sensirion and our growth strategy. And subsequently, we will hand over to the business, where Andreas Alt will present the Medical area; Niculin Saratz will present HVAC; Max Eichberger, Automotive; and Felix Hoehne, Connected Solutions. Then next, Martin, our CFO, will present the financial performance and capital allocation of Sensirion.

Afterwards, we will open the floor for questions. For those of you who are here in Zurich, it's very easy to just raise your hand and we will answer your questions. And for the online audience, please use the Q&A function of the GoTo webinar application, I will read your questions aloud. Finally, we will conclude today's Investor Day with an aperitif riche and the production tour.

Before we proceed I will briefly introduce the presenters. I would like to start with Moritz Lechner, Co-Chairman and Co-Founder of the company; then Marc von Waldkirch, our CEO; and then over to Martin, our CFO, Martin Wirz.

Then from the business side, we have with us here today, Andreas Alt, Market Director Medical. We have Niculin Saratz, Product Director Gas Sensors. Welcome, Niculin. And then over to Max Eichberger, GM Automotive. And last but not least, Felix Hoehne, GM Connected Solutions.

Finally, with every Investor Day, please note that we are making forward-looking statements regarding future events for the company's financial performance. These statements involve risks and uncertainties, and actual results may differ materially from those projected. We, therefore, kindly ask you to take a moment to review the disclaimer.

With that, let's kick things off. I will now hand over to Moritz.

Thank you. So welcome here at Sensirion. It's a pleasure for me and honor to welcome you here. I'm 1 of the 2 co-founders, together with Felix Meyer and Co-Chairman.

So welcome here at the ugliest construction side in the whole Canton of Zurich. I think you saw it when you came here. You see here a nice picture, but reality outside looks a bit different, slightly. Therefore, I allow myself to make a few comments about that before we get a bit deeper, because it's also a bit about Sensirion and where we are. That will be our new construction -- sorry, production site there, cleanroom technology, which we do here.

Why are we doing that? We are -- for most of our customers, we're single source supplier. I don't like that to have single source suppliers, because we deliver critical components. And if we fail, they will not ship. So there's always a huge pressure to convince them that we are safe. And we've been safe when you look back in supply and delivering what we promised to them. But of course, in cleanrooms, what can happen is maybe a fire. There are stories. There are many things we do to prevent that and all things around it, and you will see it probably later, but things can happen. And therefore, that's now what kind of a double kit or an extra room where we can balance loads to be safe that we always can ship to our customers. That's extremely important.

Besides that, it's incredibly full over there in our first building, so we really need extra expansion. And we do the core technologies here in Switzerland. And then, of course, all the things around it, we do abroad. So this will be the new site over there when you come back the next time, hopefully or maybe a bit later. But even we develop that, also this building is a beautiful shape. You saw it. And also some words about that.

When we bought that building roughly 20 years ago, it was already a bit an old building. I just learned now. It's built in '72, person is here. So it was an older building. And it's our DNA at Sensirion to invest our money into customer solutions and good products and less into shining offices for top management. We always did it like that. And so we bought this building and we just did some minor things around it. But of course, being from the early 70s, you can imagine insulation, quality, some issues around. It's been here for a while, but now in the context of new building, we address that you make new facade and new windows. So it's all at once the site in the world or at least in campus, sorry. But it will look better. Good.

So -- but what we want to -- I want to talk about is, afterwards, we will talk about where Sensirion is, and where Sensirion will go to. But to understand Sensirion, I would like to say a few words about where we're coming from and what our DNA is.

So looking back, we went through different phases at Sensirion, which are very typical for us. That's the Phase 1, short after foundation. Here, you see the evolution of our turnovers. And so, in this phase here, the green one, it was all about extreme focus, extreme focus. We had our humidity sensor component and our small-flow sensor components, which you see some small solutions. So it was all about getting world champion in these things and just in that, extremely focused.

It was getting into new markets, we are in market before, entering new markets, new customers, new applications, winning trust with what we do. Of course, first, developing the technology, but then really making it reliable. So that was this phase. We won in this phase. We won customers. We won market share. We got a clear market leader in the fields where we focused in, reached very high market share. For example, humidity components, roughly 50%, won market share by the end of this green phase. So really a big part there.

Actually, what you see here is also an interesting event here. Something happened there. Maybe some remember still there. There was for 1 year, humidity sensor in mobile phones or in some mobile phones, made a huge boost. It was a huge party for a year, and then hang over the year after. But we could defend our market share because we always thought if this happens, it happened since year-on, and we managed to keep the competition out there.

Okay. That's Phase 1. High market share, we are there, higher reputation in the market, but at the same time, getting attacked by almost -- I think it was 5, 6 big semiconductor companies attacking. The whole community was attacking us for humidity sensor components, which they tried to build in their ecosystem in the -- together with the microcontrols and whatever. So that was that phase.

So looking forward, of course, we came -- entered a new phase. From being the challenger to being challenged and having a big market share. Now the next phase had 2 big elements, I would say.

First, defend our market share against all competition. That was very important in that phase. It was not just taking the money and doing new things. It's about keeping it as our cash cow, defending it and even expanding our market share. We managed that almost all, one is still left. But they got partners of us. The semiconductor companies now putting our component on their ecosystem or giving up on that race. So we managed to defend, but that was an effort. We were fighting for it. We still are fighting for it.

And we also keep investing into continuous improvements and into our customer relations there. So it's really maintain the market share and expand it. Then besides that, it was about opening up from having a very narrow focus, which was needed to get the clear market leader to the broader area. So we started opening up for new measurements. Most of it with existing customers, some in new applications also.

We are entered into CO2, formaldehyde, PM2.5. So additional measurements, which are in the context of environmental sensing, which, of course, was mainly air quality and mainly indoor air quality around our ecosystem. And you could see how this was bringing additional growth, but built up on our base where we had and still have our leadership.

In the same time, we also started developing further next phase. During this year, it's not something which happens within 1 year. It's over several years. We developed new technologies, improved technologies. We have the boat for higher demand in gas sensing applications, mission-critical gas sensing applications. We prepared the field there in these years.

You see also, again, these terms. I think we probably talk quickly about it later on. It's about corona, where everybody was calling for our flow-centers for the ventilators in corona ventilation. But at the same time, everybody was afraid that the supply chains were disrupted. Everybody started ordering parts and we've always could ship. But it was kind of, again, a huge party with some hangover afterwards where we had to get out again. Good. But that's the second phase.

Then we entered the third phase roughly 2 years ago, where we started also now with the new gas sensing platforms which we have and also very little bit further than just components going more into solutions for customers like with special qualification, special standards, needing for safety-critical applications. We expanded into these fields with these new sensing parts, which we have there.

This is a journey which has started. This is a journey again, which says we build up on what we have. We keep on defending. We keep on building it up, but we expand in additional fields.

So looking back, what is the DNA of Sensirion, what can we learn? I think, we're capable of winning market shares, getting in and winning and getting into new applications through that. We are capable of defending and keeping market shares. We've done that in the past. We've also went, and I think that's important, at Sensirion, we call it next level. We move on to additional fields. We expand into new areas. We go that, we do that. And of course, we have now conditions set with additional technologies and additional applications to expand into new areas. This will not happen immediately just as explosion. It's a journey, a journey we just started. So that's about looking back and our DNA.

And with that, I hand over to Marc. Thank you very much.

Well, thank you, Moritz, for this introduction. Well, so I'd like to present you shortly where we are and then all about the growth strategy and also to lay the foundation for all the deep dives presented by our market directors afterwards.

So what is Sensirion doing? And I think this is pretty easy to explain. We just measure gases. We measure them precisely. We measure them reliably and at scale. This is kind of a common threat running through all the activities we are doing. We measure gases.

Some figures at the very beginning, CHF 340 million revenue last year, we are producing here in this area, more than 250 million sensor components. A lot of them are going upwards to one of the manufacturing centers outside of Switzerland to build solutions out of them, but the components are produced here. 250 million in the very only building, and this is also one of the reasons Moritz explained it that we are now constructing the second one.

And we have almost half of our revenues now generated outside of Switzerland, which gives us also a significant reduced exposure to the Swiss franc, but it's still existing as a Swiss company.

What we are doing in markets, we are highly diversified in market but also regions. So we serve 4 end markets, Automotive, Medical, Consumers, but also Industrial. A lot of them will present today. And in all these markets, there is an one common sense. This is the way how we approach customers. We don't like to ship what others can ship. We like to make the difference. So they make the difference in the way how we innovate, how we solve their complex problems but especially also how we serve customers from the innovation part up to be a reliable, trusted partner when it comes to deliveries.

Our business model is actually based on 5 structural strengths. And I like to dive into all of them by 1 or 2 slides. So it starts first with a very comprehensive base of customers of top brands of the world. There is a lot of top brands. Unfortunately, we are not allowed to disclose all of them. And in all these end markets we serve, we have long-standing relationship with. We own the full technology stack in order to serve these customers. We have a proven go-to-market strategy always targeting to achieve market leadership in the targeted application. We have a structural resilience in the business by a high level of diversification in different terms.

And last but not least, probably the most important, the most valuable part is about the culture. So we have an award-winning culture since foundation. This was actually established already at the very beginning of the company, a kind of a culture of innovation of entrepreneurial spirit, which also can attract a lot of talents and retain them.

Start first with the trusted partner for leading OEMs. I have already mentioned it shortly. We don't like to do what others do. We like to make the difference. And to do so, we'll start first to identify relevant problems at customer side and turn them into scalable solutions. We do that by a combination of innovation mindset. Innovation mindset means also to push limits to go beyond limits, they seem to be real limits where you can do more than what is probably imaginable at the very moment.

We combine this innovation mindset with the technology stack we have. Whenever the customer is reaching us -- reaching to us, it's too late to start with the fundamental technologies. You need the technology stack in order to serve the customer at the very moment, he is reaching out to us. And at the end of the day, the deep application know-how.

The target is always the same. That means to have a product which is superior to those solutions, they are all existing on the market. Again, we make the difference there. And at the end of the day, we target to achieve market dominance. There are some examples here, 60% global humidity market share, Moritz explained before 50% back in 2014. So despite all the attacks from other semiconductor, the big ones, that we could even increase the market share in the last 10 years.

And there is also a lot of other applications where we are already at the very high market leadership -- market share. There is also some others. We are still on the journey from solving the problem to becoming the dominant leader. For example, CO2, where we have a market share of roughly 25%, but still growing and where we are still in the journey to achieve our goals.

About the technology stack. We own the full technology stack from the chip design, in this very building, over there, there are ASIC designers, people they can design these chips in-house, all the way up through the MEMS processes, so all what has to be done on sensor elements on the chip to the sensor design algorithms, data analytics, but also application of having customer support, customer support in terms of supporting customers how to design the sensors into their application. This is all internally available. And this gives us a high flexibility to innovate at that level, which matters most.

Say, okay, in one solution or in one problem and one challenge of our customers we face and we like to solve, we probably go to the component and say, okay, the component is the best solution to serve the customers. In some other applications, we go all the way up to a full solution, including data analytics and serve customers in a completely different way. We are extremely flexible in adapting our value chain according to the needs of the customers and also application specific.

How do we work to dominate the application fields? Typically, it starts to identify a market problem, a market challenge, which is not yet solved properly. To do so, we need our customer base. It's so fundamental important to have this huge base of customers of top brands of the leading OEMs in the respective fields. Also the intimacy with these customers, the trust of our customers that they disclose what they really are concerned about, in order to support them.

Whenever we have the impression, yes, it's a relevant problem. It's a challenging problem. We can make the difference, and we do have the technologies in order to make the difference, then we like to have a kind of a customer engagement. It's by far more efficient to have a kind of a partnership with 1 leading OEM in order to develop the application, the solution. We can learn from them when it comes to application know-how, they can learn from our technology stack from our sensor expertise.

After doing this first lead OEM development we'd like to scale the solution. We'd like to scale by reaching out to all other top 5 OEMs first. And later down the road, if we have one, hopefully, all 5 of them also to reach out to all the other ones in order to scale it up to leverage what we have developed and especially also to achieve this leadership in the respective market.

Afterwards, the customers are served locally. We do have the engineers locally in all the regions in order to support them, and we have also the manufacturing centers in order to produce the solutions close to the customers. And then the whole story starts again. If you do this job well, it's the best platform in order to start with the very same customers with the next problem they are facing in order to support them. This go-to-market strategy is also underpinned by a disciplined and focused R&D allocation. 10% of our R&D budget flows typically in fundamental technologies, where we are investing early in order to be ready at the moment, we need this technology.

To give you an example, later in this session, Niculin will talk about the A3 opportunity in the HVAC market. So first of all, this has already been done. We have to invest into fundamental gas sensing technologies in order to be ready to measure A3 leakage. Afterwards, 30% of our R&D budget flows into platform development, the technology alone is not enough in order to convince customers to be engaged. So you need a kind of a platform where you say, okay, I can demonstrate what you need. It's not yet the product, but at least we can demonstrate the technology and especially it's a platform which is easily scalable and adaptable for the very problem the customers like to be solved.

And then the main part of the R&D, it's working on solutions development, on solutions where we are in this close collaboration and interaction with lead OEMs in order to learn from them, but also to have a very well focus -- a very disciplined focus on the solution at the end of the journey.

And then, based on this go-to-market strategy to scale it up to all the other OEMs in the respective field, 10%, the remaining 10% goes into the customization to serve all the other ones, but based on what we have already developed before.

About resilience. Our business model is intrinsically resilient, thanks to the fact that we have a high diversification in markets. We serve Automotive, Consumers, Medical, but also HVAC Industrial Applications. We have a very broad base of different customers. They are typically reacting differently. So we are not linked directly to the automotive crisis or any kinds of downturns in consumer markets.

On the other hand, we have all the technologies in-house. So we are not strategically dependent on any kinds of other suppliers, key suppliers, they own the technologies we are based on. We do have the technology in-house. In operations, we have worked and we have invested heavily in the last couple of years to diversify our global manufacturing network in order to get on to the level to have almost half of our revenue produced outside of Switzerland.

We have also invested into a dual sourcing strategy when it comes to supply chain. And last but not least, since 2 years -- 3 years, we hold a strategic wafer stock in order to mitigate any intrinsic semiconductor risks linked to the Taiwanese region.

Now you might have in mind and say, okay, the CEO is talking about resilience. But what we have seen in the last couple of years is a high level of volatility. You're right. Our structural resilient business model was heavily challenged by exogenous factors. You can name it factors. It's probably also 1 factor, the pandemic, and all the following up reasons. This was a challenge. I'm sure for you, it was also a challenge for us to overcome all these exogenous factors.

It started in 2020 with the fact that -- it started in 2020 with the pandemic, with the fact that we are #1 in medical ventilators. So there is almost no question, whether we serve our customers and whether we do all what we can in order to scale up the production by a factor of 11. Afterwards, the pandemic, as you know, led directly into this probably the most severe shortage of semiconductors in the last century. And also there, we said, okay, we are a single source supplier for all of our customers or almost all of our customers. So we have an extra responsibility also to prove that we are trusted partners. So we have to do whatever we can to supply safely to them and to deliver what they need. And we did it.

So we -- honestly, we were proud to reliably deliver our customers even in the highest level of shortage in the semiconductor industry. But afterwards, the hangover came -- also hit us. That means 2023, we had this destocking effects. They also hit the company in the same way as it was boosted before in 2021 and 2022.

In 2023, we faced actually a new challenge to say, okay. On the one hand side, we have now this destocking. So what we should do is to significantly reduce the resources in order to stabilize the profitability. On the other hand, we faced this huge chance of A2L. Then we decided deliberately to say, okay, we are continuing to invest into A2L because this is a growth area we like to capture. We like to become a market leader in A2L.

On the other hand, definitely, we also started efficiency gaining programs in order to cut costs there where we are not jeopardizing the growth areas of the future. And in A2L, as you know, today, it pays off or it paid off last year with a significant increase in revenue, but also in profitability.

The latest exogenous factor was actually about Trump's trade policy. Back and forth all the time. Here, we can say we are fully resilient. Thanks to very favorable commercial terms with our customers.

Last not least, the fifth strength we have is the culture, a culture which is built on innovation, on entrepreneurial spirit, on taking reasonable risks to push limits to innovate and to do what is actually not thinkable to be feasible.

And I can give you an example. When we started the A2L journey, our ambitions are clear to say, okay, there are many, many players in the field. This was a new field for us. But we said, okay, our target is to be the #1, to become #1. This sounds to be crazy. But we did it at the end of the day by a combination of ambitions, a combination together with the technology, with the innovation and with hard work, it's not just about ambitions, it's also hard work to do so.

And this all is based and rooted on the culture we do have, which also attract and retain these people, they can do it. And therefore, it's a very high value for the company. Based on these 5 strengths, I'd like to present you shortly the growth strategy looking forward.

Again, the threat running through all the activities is as simple as it is. We measure gases, whenever it comes to a challenging problem to measure gases. Then we are in a market which is extremely attractive. This we call it smart gas sensing, a market which is pretty large and especially fast growing, mainly driven by a lot of megatrends. There are just 4, I picked out. It's about health. There are many different applications in the area where we can add benefit, we can create value by our technology, by our expertise in measuring gases. My colleagues will come to the details later on.

It's about climate and environmental protection when it comes to a lot of monitoring of critical gases. It's about energy efficiency in many processes. You have gases, they have to be monitored in order to make the system more efficient. And last but not least, it's about safety and regulations. There are a lot of applications where safety can be increased by monitoring the gases in the system or outside of the system.

Our unique edge is today and Moritz already mentioned it shortly at the end of the story, to say, we are now at a position where we master a very comprehensive set of technologies to measure all kinds of small gases, all kinds of -- to be more precise to measure small amounts of any kinds of gases from high-volume components up to very high-end analytical systems.

You see it here on this slide, we run a lot of components, typically in millions. And we go up to very dedicated systems, it would be nice to have them also in millions, but this is not realistic, but very high-end systems. And you will see on the back of our product demonstrations pretty bulky solutions, highly sophisticated to be very precise. For example, in this case, to monitor methane emissions. This is the base what we have invested heavily in the last couple of years. This unique edge to master all these technologies to be flexible to apply those technologies we need to address the problem of the customer.

Based on that, we have the vision to become the market leader, not just in humidity, not just in small-flow rates, not just in environmental indoor air quality measuring, but in the global market of high-value smart gas sensing from components up to high-end analytical systems.

How do we like to do so? There is 4 pillars we like to focus on. First of all, you should never ignore where you are strong today. So our first strategic focus is definitely to defend the market leadership and even to expand the market leadership in all those fields, we are already engaged today. So mainly in environmental and in-flow sensing. That's the same approach as 10 years ago, when we had the humidity market and we say, okay, we expanded now to environmental sensing, but we should not ignore humidity. Therefore, we don't like to lose any of the market shares we have won. And this is the very same approach we have today. It's not even we don't like to lose any market share we like even to expand the market shares even further in all the fields we are in today.

On top of that, we like to build leadership in leakage sensing. This is a fast-growing market, driven by a lot of regulations in different fields, not just in HVAC. And then we like to expand into high-value solutions mainly focused on Industrial Applications and in Medical, some examples will be presented afterwards by my colleagues. And last but not least, you can never be a trusted partner of your OEMs without paying attention on the resilience of your business model especially in turbulent times as we are in today. Also this is a fundamental pillar of our growth strategy.

How do we like to tackle that? We do not have to reinvent the wheel. The go-to-market strategies -- strategy we have applied in the past is absolutely valuable also to go forward in the very same way, that turned out to be a proven and valuable way how to create value and also to achieve this market leadership.

That brings me to the end of the growth strategy. Our playbook is to addressing relevant and challenging problems. They have to be solved where we can make the difference, driven by megatrends structurally and fueled by the technology portfolio we do have. This set, comprehensive set of technologies to measure gases and the market access, thanks to the broad base of our customers.

Based on that, I'd like to shortly introduce the session, which comes now, that means about the deep dives of the concrete growth areas we are working on, perhaps to have the whole picture. There is today growth areas, they are still growing. In those parts, we are generating revenue today. This is not the focus today. It's not -- the growth is not only coming from the growth areas, but it's dominantly coming from the growth areas, but also the existing business will grow in future, but this is not the focus of today's Investor Day.

Next growth areas are those where we are very close to monetization, where we're working on now, and they are even sometimes already today in the phase of being ramped up. But there is even more. We are already working on future growth areas. Most of them, we cannot disclose today due to competitive reasons, but also due to the fact that some of these growth areas are still in a very early phase.

I just checked shortly the Capital Markets Day slides of 2021. In this area, we didn't talk about A2L at that time, because it was too early. But you can be sure we have already worked on that at that time. Otherwise, it wouldn't be possible to be now the market leader in A2L. So you see there are -- is also potentially in the future growth areas, but it's too early to talk about that.

There is only one exception where I'm being asked pretty often, this is about Lumiphase. The company which is located in the next building here. This is one of the future growth area. It's not a growth area for the next 1, 2, 3 years.

I'd like to shortly to comment where we are with Lumiphase. So for all of you, they are probably not familiar with Lumiphase, Lumiphase is a spinout of IBM, Ruschlikon of Zurich, the research center. And they have a unique technology to manipulate light and to provide technology for the next levels of optical communications and data center, mainly driven by AI.

What is Sensirion's engagement? Sensirion holds 49% of the shares, and we are manufacturing partner because it turned out that the process the Lumiphase needs to manufacture their chips. It's pretty similar to the process we are running anyway. So we have there a very high level of synergies together.

What is the upside and the downside potential? The company is still in an early phase. They are not yet on the market today. On the one hand side, there is significant upside because it's AI. It's data center. So it's one of the hotspots of the technological world today. On the other hand, we'd like also to underline very candidly, there is still risks they are not yet mitigated. The technology and market fit but also the timing. It's a very dynamic market. And therefore, you can never be sure whether you hit the market at the right moment with the right product, with the right customers. This is not yet proven. We still work -- we are still working on that.

Lumiphase, to be very clear on that, is not included in our financial planning. It's a kind of a dessert. If it works out to be good, it can be huge in future. But we can also fail. So both potentials are possible or both scenarios are possible. Therefore, it's a kind of a future growth area. The only reason why we are going to present it here is because it is a kind of stakeholder engagement we have or shareholder engagement, I am asked pretty often what's about Lumiphase. Therefore, we like also to comment. All the other future growth areas, we are working in the other levels here, and we are going to present them as soon as they are more concrete.

Well, with that word, I'd like to hand over to my colleagues. It's too fast. First of all, to Andreas for Medical. Thank you.

Hello, everyone. I would like to start with a brief introduction to myself and then hand over and dive into the Medical market.

So my name is Andreas Alt. I'm the Medical Market Director and my background or I joined Sensirion in 2015, been here a little bit over 11 years now. And my background is in electric engineering. So I studied at the Technical University in Munich, did a PhD also in electrical engineering at ETH in Zurich. And yes, I'm very passionate about Medical.

So to build the bridge from Marc's introduction, I think Medical is a very good example of how Sensirion can expand from a very strong core position into the smart gas sensing area. If we look at where Medical at Sensirion is today, then our solution space spans from ventilation over anesthesia to CPAP in the areas of intensive care, emergency and transport, recovery and home care.

We distinguish between 2 different areas here. One is the core business areas, which are shown here in black. And then our growth areas, which you see here highlighted in green. And we will be diving into 2 of these smart resuscitation and capnography later on today.

In our core areas, everything revolves around smart -- around respiratory flow sensing. So in this area, we have built market-leading positions, for example, in ventilation, but also in CPAP. And from this very strong position, we are now looking to expand into neighboring fields, into high-value applications such as capnography, smart resuscitation, metabolism tracking but also gas delivery therapy. And this is really important to understand. So we're not chasing disconnected opportunities here, but we are looking to expand from a strong position into these high-value applications -- into these high-value applications and where our sensor capabilities are already trusted.

This gets us to the heart of the medical strategy. So today, we are the flow leader around respiratory care. And this means, for example, in ventilation that we hold more than 50% market share. In CPAP, it's even exceeding 90%. At the same time, the market is shifting towards multiparameter diagnostics and this is driven by the increased chronic respiratory disease, the increased use of gas monitoring in clinical settings and the increase on need of advanced respiratory monitoring techniques. And this puts us in a very unique position.

On the one hand side, we combine flow leadership and our very broad gas sensor technology portfolio. And on the other hand, we have built a lot of application knowledge, and we are able with our sensor technology to resolve many of these complex problems that exist over here. And this together allows us to unlock attractive market opportunities which we estimate to exceed CHF 500 million by 2035.

Now you may be wondering where are we today on this journey. And this throws us back in time around 2021 or after COVID. So since COVID, we've spent a lot of time and effort into investing how we can expand beyond respiratory flow sensing. And what you see here is basically a part of -- a big part of the result. So this is the high-level insight into the expected product launches that span from 2026 to 2030 and through the applications of metabolism monitoring, smart resuscitation, capnography as well as gas delivery therapy.

And again, it's important to understand, we are not -- our strategy is not built around a single product over here, but it's really a product pipeline, which allows us to continuously bring products to the market. And this already gets us to the first deep dive application, smart resuscitation.

So what is smart resuscitation? An important part of smart resuscitation is bag-mask-valve ventilation. And this is what you see over here on the right-hand side, there's a mask being placed over the nose in the mouth of the patient, and then by squeezing this bag, the caregiver can force air into the patient's airways. And this is important to support or take over the breathing function, which the patient has lost.

Now this happens today without any kind of feedback, and this is actually a problem because you do not know how much air to force or to provide to the patient. And the American Heart Association, for example, they report more than 500,000 people in the U.S. alone that suffer from a cardiac arrest every year, and only 15% of these people survive. And this low number of people surviving is also due to damage done during CPR.

And this is a problem that we can address. So with a single-use sensor that combines the flow, pressure and CO2 measurement, we can provide this feedback to the caregivers in order to allow them to provide better care to the patients. This is something where we, as Sensirion can really make a difference.

Let's have a look into the current state and where we are heading. So today, the bag-mask-valve ventilation suffers from poor control. It's a clinically at-scale relevant problem. There are more than 30 million bags provided in the emergency care setting alone. These do not provide any real-time feedback to the caregiver, and this leads to an increased risk for poor outcome for the patients.

Now if we can add a feedback component to this smart bag-mask-valve ventilation, then it has already been shown that this feedback is linked to improved outcomes. So patients' outcomes can be improved by this. At the same time, the exhaled CO2 is a very important component and provides a lot of insight into the ventilation effectiveness. And lastly, there are even international guidelines that are now recognizing this and recommending CO2 as a key parameter for the feedback.

So, for me, this is a very nice application that we are supporting. Today, it's a high-value application, it's underserved and it's something where we can really make a difference, at Sensirion.

How does our solution look? Well, this is shown right over here. This is this module that you see. It combines flow, pressure and CO2 measurement in a single-use module. This means that it is exchanged with every bag or with every patient that it is used on. We envision the use in cardiac arrest and over to the transport ventilation. The market size, we estimate it can reach CHF 150 million by 2035, and we are in designing stages with leading medical OEMs and the first introductions to market already expected for 2027. That is already next year.

This gets me to the second application deep dive, volumetric capnography. Volumetric capnography is typically or capnography, the conventional capnography is typically used in intensive care today. So patients that are intubated and you see at Sensirion over here, it measures the CO2 concentration of the axial breath against the time base. And this conventional capnography today lacks sufficient insight into the efficiency of the ventilation and the way the lung is working.

And now let's compare these 2 capnography details. So on the left-hand side, we have the conventional capnography. This basically answers the question, are patients ventilated and are the airways intact? This is already very important information, and this is why today conventional capnography is already installed and used in anesthesia and intensive care. And many modern therapies today, they already rely on conventional capnography, but they could still further benefit from a deeper diagnostic insight.

And on the right-hand side, we have volumetric capnography. The difference here is that now we measure CO2 concentration against exhaled flow. And this provides more information, it can tell you where the CO2 from the lung is coming from. And this diagnostic and added diagnostic insight is very helpful in assessing the ventilation effectiveness and the lung efficiency. It is increasingly used in emergency procedures and new ventilation strategies, and it requires a precise measurement of CO2 and flow, which has to be synchronized and measure it also proximal to the patient which is a very harsh environment. But this is again where our respiratory flow, know-how, and competence helps us and makes us actually the best person or the best company to address this problem.

How does our solution look like? So it consists of a reusable sensor head. This is the part that you see over here and then different types of airway adapters. And again, these airways adapters are single-use, so replaced with every patient that they're used on. When this is brought to market, we do not expect it to replace conventional capnography, but more to complement it from the beginning. But because it provides more diagnostic insight, it will eventually take over and be the preferred solution in ventilation and anesthesia applications.

We estimate this market to reach around CHF 200 million by 2035. And currently, we are working on sampling to lead customers with prequel types. And after the completion of the development we expect to enter the market or our customers to enter the market by 2028.

This gets me already to the conclusion. Why is Sensirion position to win in this space? So we are the established leader around respiratory flow sensing. At the same time, we see that there is a transition to multiparameter respiratory therapy. We are -- we can leverage our leadership as a gateway into multi-gas sensing solutions. We are the trusted -- we have trusted relationships to many of the large medical OEMs, and we've built out a staggered product pipeline, which is a strong foundation for our future growth.

And lastly, we have moats due to the regulatory entry barrier, but also our strong technology portfolio and the deep application know-how that we have established.

And with that, I hand over to Niculin for the HVAC part.

Good morning, everyone, from my side. My name is Niculin Saratz. I'm leading the product management. So, I'm Product Director for gas sensors here. So we heard a lot about gas sensors. I'm not leading all of the company. That's what Marc is doing. So what we have, gas sensing, is part of it.

I've been with Sensirion for about 15 years. Before I did a PhD in physics, here at ETH. So I grew up here. And today, I will tell you about A2L and some other aspects around this heating, ventilation and their conditioning industry.

So where do we start? The heating, ventilation, air conditioning, HVAC industry, we have 4 fields that we are active in. One is indoor air quality management. As we heard, that's where we started, like 5, 6, 7, 8 years ago, where we measure indoor air quality parameters like humidity, temperature, fine particles, formaldehyde or CO2. So like these small gadgets that you -- or devices that you had on your chairs this morning, that's an indoor air quality monitor that measures PM2.5 and CO2. And it includes our latest generation CO2 sensor, which is the smallest CO2 sensor you can get.

Sorry for the online audience, there is some benefits for being in person. There's gas furnaces and control, where it's all about energy efficiency. So you can better control how our gas burner burns to avoid dangerous exhaust gases for increased efficiency. And also here, it's been building ventilation, like when you have the ventilation ducts you see in the building, you can either always blow fresh air in or you can monitor, well, how bad is there actually and then depending on how bad the air it is flowing more or less air. So you can save energy. So that's what we mean by demand controlled ventilation. In this case, ventilation of buildings as opposed to ventilation of patients, as Andreas Alt had talked before.

And then today, the focus of today will be refrigerant leakage where we come from a strong growth step in A2L, and I will give you a little bit of insight to what the next step in this market is.

Good. So this is about refrigerant leakage detection. So we are delivering this major megatrends of environmental protection. It's related to climate change and safety and regulations, right? So if you have such an air conditioning system, as you see here on the right, what is actually refrigerant leakage? What is actually the refrigerant?

Inside this air conditioning system, you have a heat pump. And in the heat pump, you have a liquid or a fluid that is circulating. That's the refrigerant. And that's what we will talk about. So this refrigerant, historically, where these freons and substances that we banned like in the '90s, because they damage the ozone layer. You may have heard about that. So there was a phaseout of this very first generation of refrigerants.

They were substituted by the hydrofluorocarbons, which is today, they don't damage the ozone layer, but now we found out that these have a global warming potential into 10,000s or in the thousands. So they really heat up the climate by 10x more -- 1,000x stronger than CO2 at the same amount. And so there is now, there was the Montreal Protocol, which is a global agreement to get rid of these refrigerants with the high global warming potential. And by this, the estimate is we can reduce the global warming by almost a degree.

Now -- and the substitution of these refrigerants that was then the A2L refrigerants. A2L stands for a class of refrigerants that is, has a low global warming potential because they degrade faster in the atmosphere. But when they degrade in the atmosphere, that's because they are more active, which also means they are flammable. And because these refrigerants are flammable, you want to have a leakage sensor. Because if you have such an air conditioning system in your living room and you're smoking a cigarette and there is a leak, you don't want to have the flammable refrigerant leaking into your living room without concern.

So that's the first push to this market is this climate regulations that mandate the change of these refrigerants from traditional ones to the A2L.

To the next page. Now because we have these flammable refrigerants, we want to have leakage detection. And on the other side, this whole -- why is this relevant for us? Well, it's a new opportunity and emerging opportunity. But on the other side, it also the need for air conditioning and cooling and heating is increasing, right? So we're moving here in Europe. We're moving from fossil fuel heating systems to heat pumps, so electrifying heating, we have increasing temperatures in spite all the efforts globally. So there is an increasing need for air conditioning units. We have huge markets in the world that don't have yet a high penetration of air conditioned units. They will also need more air conditioning units in the future.

And last but not least, there's also cooling needed in data center and similar infrastructure. So there is a growing market. And if we put this together, we estimate the market size of around CHF 400 million or beyond by 2030 by this regulation -- regulatory-driven pushes just for the leakage sensing in this business. And it's not the market size of HVAC. That's much, much, much larger. It's just the sensors that go in there.

Good. So that's the cookie we go for. And that's what it is about. A short summary of how this works and how these transitions work. I mentioned the Montreal Protocol and this Kigali amendment in case you want to look it up, that regulations banning these A1 refrigerants here that had a huge global warming potential. They are not flammable at all, and they also fluorinated substances.

We move to the A2L refrigerants, which are much better in terms of global warming potential, but they are still fluorinated chemicals. And they are a little bit flammable. Now that you may have heard all this talk about the F-gas regulation and PFAS and fluorinated chemicals that, the keyword "forever chemicals" that we heard that they show up in drinking water and everywhere. Well, these A2L refrigerants are such fluorinated substances. They are not as bad as these maybe, but they're still not super nice.

So, the European Union is leading there to move -- to push the move from A2L to even more environmentally friendly refrigerants. So -- and one idea there so we can use the different substances that for the moment, the prominent candidate is to use propane or R-290 as it's in a refrigerant. And propane, you know that's what you have in your grill on the balcony. So that's highly flammable. So it's very eco-friendly, it's not flourinated, but it's highly flammable. And you can already imagine what this means for leakage sensing.

Good. That's the difference between A2L and A3. That's actually the class in flammability, the higher the number, the more flammable the refrigerant is.

Good. So how does this look locally? So we have this global -- this global regulations or conventions about getting rid of these phasing out these high global warming potential gases, but the implementation is by country, of course. So each country makes their own laws, makes their own regulations and their own time lines, and this is where we go.

As we say, Europe, the A2Ls are already currently standard. And they have been so for a while. And Europe is already thinking about phasing out the A2Ls and adopting the A3s over the coming decades. So there will be a staggered phase in of this A3 depending on the type of system, et cetera, in Europe.

In Japan, also A2L is currently standard, and there is a recommendation to move these A3 refrigerants already. In the U.S., we have just introduced the A2L beginning of 2025. This is the A2L boost we talked about in the annual report. And this was happened just in the United States, and there will be -- due to the local set of regulations and architecture of the systems, we don't foresee an introduction of A3 anytime soon there.

And last but not least, we will have other countries like China, who will jump directly from the A1s to the A3s, skipping this intermediate step, because now the technology for these A3 refrigerants is ready, and they are more eco-friendly. They are cheaper than the A2L. So there's reasons to skip this step. So this gives a bit of a pipeline of adoption for these refrigerants. And this is what we want to illustrate here a little bit. I mean, don't take this too quantitative, but that's where we are today.

So Sensirion is market leader in A2L refrigerant leakage detection, and that was pushed by this demand in the United States. That's the step function that we see. So we have achieved from 0 to more 50% market share. And our success factors were, again, what we have talked about. So technology leadership without technology-leading sensing core you don't get there. And customer intimacy, there was a difficult phase for our customers. Some customers said that was the biggest disruption in the HVAC industry over the last 40 years, we helped them to overcome these problems.

And sometimes, we have to think behind our customer. We have to understand their problem sometimes even better than they understand it themselves. So this application know. We are fulfilling this with a globally diversified and resilient supply chain, and we owned or earned a strong reputation for technically solid, reliable but still commercially attractive solution. Right? So that's the key. I mean, you can't sell a watch. And this market is expected to grow a little bit. I mean it's kind of a step function for the introduction, but we'll still grow over the coming years.

Now the A3, and this is important, this comes on top, right? It's not an A2L you introduce once and then everybody has A2L, then you make no money anymore, no. I mean there's -- you need heating systems need to be replaced every 15 years or so. So there's a continuous stream. So that's this gray point.

And on top comes this introduction of A3 in the different regions as they come one after the other. So the A3 comes on top, it comes a bit slower. It's a bit more gradual. It's not such a step function because it's not just 1 country, but it will be there. In the end, it will likely be larger than A2L.

Again, so the push is environmental regulations. It's safety norms, that mandate then the use of the sensor. So the environmental norm mandates the A3, the safety norm mandates the sensor. And this is supported by the market because everybody sees well, that's kind of the future the way to go. So there's also a natural pull towards this A3 refrigerants.

Where do we stand? We stand -- I mean, Sensirion is well positioned to extend or expand this leadership from the A2L, also carry this over to A3 sensors. We have the customer context, the customer intimacy. We have the technology core. It's again, the picture Marc showed before, that sits inside this device. So we have a proven base technology. We have first parts out there for A3.

And so we have started now with this first this kind of the early adapters is the heat pumps for the European Union, which is just very low volumes. But the larger volumes for the air conditioning units will follow in the different countries as they come in. So we'll -- we're ready for this. We're already running, and you will see the outcome hopefully in some time in the future.

Good. So why -- where do we stand? Where we positioned here? Again, market leadership is important for us, it's still about scaling this, being able to, on one hand, be the technology market leader but also in terms of volumes, lead the market.

How we get there? We get there by customer intimacy, but also by being able then to use our knowledge and the experience to provide the tailor-made solutions to our customers that they need to be successful. We have full control over the value chain from the chip to the application. Nobody knows the chips as well as we do. Some customers say, I want to buy the solution from the company who owns technology. We own the technology.

We -- of course, we are regulatory compliant also there, if in such a big regulatory change, it's important to be at the forefront of this and always know what's going on. And we have a global footprint by now. That's a difference to maybe between 10 years ago where we have sites, not only sales sites but also manufacturing sites where our customers sit, so that we can serve them where they need parts.

So it's obviously not the same if you ship around A2L sensors that are this size versus shipping humidity sensors that are maybe this size, right? So application matters. And as I mentioned, the deep application know-how we have to understand the customer's problem very precisely so that we can solve it in the best possible way. And we are ready for that.

And with this, I hand over to Max. Thank you.

Well, we have just heard we are a gas sensing company, and I have request for the technical team to open the doors to let in some fresh air. Please real quick. I sense a little bit of air disruption. So for the online audience, hang on, you will not feel the cold.

And second, I can have a question because we are mid through the presentation to raise some activities, who has come by car today. Rough guess, 30%. And this is even in one of the best publicly served countries in Switzerland, you have about 30% people coming by car. And this is why automotive is and will remain interesting.

Automotive has seen as a manufacturing -- car manufacturing market, about 5% -- short of 5% growth last year. So 2025 was almost 100 million vehicles produced. So it's coming back into growth. And I would like to show you and take you on the journey of what we do in the automotive sector to bring our technologies into this market.

We come with our very strong footprint in cabin climate and combustion control, which Marc and also Moritz has mentioned, we have shown a global market penetration of above 50% to 60%. This is where we come from, but I would like to show where we're going in growing even further. And this is one key megatrend is autonomy, autonomous driving, self-driving cars, self-driving humanoid. It's sustainable and safety. It's bridging what Niculin just said about refrigerant leakage in mobile air conditioning, in MACs. And it's lastly electrification of the propulsion of the transition from ICE to BEVs.

My name is Max Eichberger, I'm the General Manager of Sensirion Automotive Solutions, and I will take you through this journey.

Let's first look into advanced driver assistance systems, where we see that these systems, they will pilot the vehicle without you intervening. And they will make sure that the vehicle is not crashing. So you trust your life and the lives of your passengers onto this system. And what can happen to the system after first bring into place, it can have reliability issues from water ingress, for example. This is something which is beyond self-diagnosis from the typical electrical circuit. So you would need to diagnose this with additional sensors, which measure either humidity or water ingress.

And this is relevant not only for the electronics, but also for the mechatronics. Mechatronic is, for example, steer-by-wire or brake-by-wire system. So it can enable a fail-safe operation of what we call Level 2 plus autonomy. Level 5 is full autonomy. You enter the destination. The car takes you with you sleeping in the car and Level 2 plus requires some certain level of alertiveness and maneuverability of the driver.

We see an addressable market of about CHF 100 million starting in 2030, already started, but reaching this market size in 2030. It happens as the market penetration and the adoption of ADAS, advanced driver assistance systems, will follow and come into the market.

What is our solution? We have contactless water and humidity-ingress sensors. And we have also pioneered this technology by making this function safety certified with an ASIL-rated humidity sensor. We have a market position which is standing on 2 legs on the OEMs and on the Tier-xs, and we have a design-in and engagement with LiDAR, so light detection ranging sensors and camera providers and also steer- and brake-by-wire system providers.

Coming to the second growth pillar is, again, bridging the technology that has been already very much in place with A2L, in stationary air conditioning devices now bringing this into mobile air conditioning devices where we see that the requirement for PFAS 3 and low global warming potential refrigerants brings a huge demand also in the vehicles.

Megatrend here is sustainability and regulation. We see that this change in the refrigerant leads to a new market opening up there. At the moment, focusing on R744, this is a CO2 refrigerant. And then R290, a propane refrigerant happening largely regulated in China and in European Union. We see an addressable market reaching to CHF 200 million by 2035, subject to the global regulation -- regulatory approach.

What's our positioning there? We have these great automotive-grade sensors in place and we placed this not only a single bet on 1 technology, but we have basically 3 technologies in place to capture this market, whatever suits the customer and the use case best. And we have received 2 years ago already first nominations. We're just now ramping up and start of production for 1 key automotive customer, and we are engaged in several RFQs, request for quotations, from different OEM and Tier-xs.

So let me focus now on the third growth field in the automotive sector, which is one which I will dive more into detail. This is some runaway risk in electric vehicle batteries and the mitigation of this risk. So you see this is based on this electrification trend. And globally, we have already reached about 20% and more electrified vehicles last year. And we see that with lithium ion batteries, if there is a more function, this can lead to a reaction where the whole battery catches fire, and this goes very quickly. This is the issue. It happens quickly, and it has a devastative effect on the vehicles, on the passengers, on the surroundings, on the sub-ground parking areas and so on.

We see a market size larger than CHF 200 million by 2030, also driven by the regulatory adoption. Our position here -- again, we have automotive specified gas sensing solution technology there for these kind of events. And we have, again, 2 years ago, received first nominations and currently engaging several requests for quotations from OEMs, Tier 1s and battery suppliers and already preparing the next-generation technology.

But what does it mean in detail? In detail, means we see that this 20%, 25% market share of battery electric vehicles in last year. I said this was a growing year of automotive production is targeted or projected to reach almost 50% by 2030 according to the International Energy Agency. And so this market is hugely growing. And you see on the other side, the problem is growing aside. We see already about 300,000 vehicle recalls last year in the U.S. based on issues and quality topics and risks associated with the battery of a BEV.

This puts risk on not only lives, but also reputation of OEMs where you can see different OEMs going through the media and having negative impacts on the sales revenues. But this is not only based on reputation, this is based on regulation. There is the UN GTR 20, which is mandating and suggesting a 5-minute early warning to the passengers as soon as such a failure is detected. And there you see different approaches to the regions implementing and reflecting this UN global technical regulation.

In Europe, you see already an impact now. In China, also Japan and Korea, following and the United States with the recent pivot from BEV back to ICE relaxation on the requirements. Nevertheless, there is strong players also in the U.S., focusing on BEVs and also safety.

So what does this technology do? You have different approaches to solve this, the conventional where you just measure temperature is too slow, where you just measure the pressure increase in the battery pack is too slow or too transient. You cannot capture the full picture because you're going through a tunnel, you have a truck coming the counter way to you generating a pressure peak, and it's gone. So this is not the fast enough and the safe enough approach to detect issues with the battery. A more sustainable approach and quicker and reliable approach is to base this on specific gases that will be generated once there is a thermal runaway or thermal or an electric malfunction happening in the battery. And this is where we focus on, because we do gas sensing. And this is what we do reliably and at scale.

And as I said, we have different technologies addressing this market and these requirements based on different places and full solution integrations. We have 2 years ago, already won multiple nominations. We see first revenue contribution this year. Last year, we did SOP, start of production, for one of the customers and we see scaling across all the key regions after 2030.

And what's a very strong value proposition for our product into the market is that we are engaged with all different players from the OEMs, from the car manufacturer to the battery management system provider or to the battery supplier themselves.

So lastly, why do I believe we win in automotive? It's not only because of this reputation, which is based on 60% market share in already existing niches, but it's based on the solutions that we have for mission-critical problems in these megatrends. We have our reputation built up over the last decades. We have a full vertical integration of the key technology, which is similarly to the talks previously hear a lot from our customers that they don't want to purchase a solution from anyone, but from someone who really deep down knows the whole value chain, the technical specialties and can solve the problems associated with them.

For automotive and intrinsically strongly moated market, you will have to have different regulatory compliance procedures and certifications in place to engage in this market. What's even more of an importance now is this global footprint that you want to manufacture in this automotive regions globally, so you can ensure a safe supply to these customers. And on our side, we can ensure access to the right cost structure of our product. And lastly, the deep application know-how that's based on several decades experience of developing these technologies and moving these technologies forward into the application.

And with this, I hand over to the last market deep dive, which is governed by Felix.

I would like to continue our journey through the markets from the streets of the world to the desert of West Texas. So you can already probably guess it from the picture. We're talking about the energy sector, the oil and gas industry. And I think we have all experienced in the past few weeks and months how impactful the energy sector is to the lives all over the world and also here in Switzerland. And we at Connected Solutions, we support our customers in the energy sector to reduce their greenhouse gas emissions.

So I'm Felix Hoehne. I'm the General Manager of Sensirion Connected Solutions. I'm with the company for 13 years. And as my colleagues, I have a background in physics.

So, we help our customers in the energy sector, so specifically in the oil and gas industry to reduce greenhouse gas emissions, specifically this is the methane emissions. And we do that by offering a comprehensive portfolio of continuous monitoring solutions, so IoT solutions to measure and monitor methane leaks and to help our customers to manage methane to mitigate methane in the end to reduce methane emissions. We address a market in 2030 of more than CHF 150 million.

Now to start, why is methane important? Why should we care about methane? So if you look at the drivers of climate change of global warming, the best scientific estimates are that roughly 30% of this climate change is not driven by CO2, but actually by methane. So methane is a very strong greenhouse gas and 30% of the global volume that we have today since industrial evolution has been driven by methane emissions.

These methane emissions come typically from 3 big sources, 1 is agriculture, so cows, and the second is landfills. And the most important 1 is the energy sector, which basically the oil and gas and coal industries. And roughly 35% of these methane emissions come from the energy sector and thereby are a major contributor to global warming.

Now more and more operators in this field, so the energy companies realized that their -- and they call it, it's not my word, it's their words, their license to operate for the next 20, 30, 40 years is a reduction of methane emissions. And this is driven by pressure from different stakeholders. So in particular, there are stricter regulatory landscapes worldwide. There are the financial stakeholders of these companies are putting pressure on them, the gas buyers. So people in Europe are putting pressure on these companies and also the general public.

To effectively reduce methane emissions, you need monitoring. You need to know what's going on. So what you need is a fast and efficient leak detection, you need a root cause analysis and to be able to repair and fix these leaks, and also you need accurate emissions reporting, and that is what we are supporting with our solutions.

Now if you look a bit more into the global drivers, and in particular, the regulatory and reporting drivers, there is a global industry reporting program that is very important, that's very well established. It's a program by the United Nations. That's called the Oil and Gas Methane Partnership, or OGMP. And it's basically covering the biggest part of global oil and gas production. So most of the big companies and the household names that you know are members, including companies like Total, like Shell, like Exxon and many, many more. So overall, it's 150 and more members globally. And if you are a partner of this program, if you're a member of this program, you have to report your emissions transparently and based on measurements and that's where our solutions help and come in.

Then there is also a global regulatory landscape. I want to start to first look at the major main market for oil and gas production at the United States. There, it's important to understand that in the United States, there are regulations on state level and on federal level.

Now to already anticipate a question later in the Q&A, federal level, United States, what about Trump? And so there are a lot of important regulations that enforce methane mitigation, methane monitoring on federal level. This is what we read in the media about the Environmental Protection Agency, EPA. These regulations are in place since the Biden area, but they are currently not enforced and are on hold under the current administration. So that means on a federal level, we lack additional tailwinds that would have accelerated this market. Because these regulations are not enforced, they are still in place, and we don't know what the future brings, and political administrations will change again, probably, let's see.

But this is, at the moment, not a strong driver as you might have expected. But in the United States, we have a lot of relevant regulations on state level, in particular, in oil and gas-producing states like New Mexico, like Colorado, like California and Texas, that are very relevant and enforce methane monitoring. There's a specific interesting example, California, it's a democratic state, strong environmental position. They have or they're planning to put a regulation in place starting in '28 to 2030 that requires monitoring of most oil and gas sites continuously in California. So that's a very interesting market potential there.

Now if you look to the neighbor to the north of the U.S., very strong oil and gas production. And there, we see a lot of movement just recently starting end of last year. We see upcoming much stricter federal and provincial regulations in Canada, which are in effect in '28 and then fully rolled out until 2030. So that's creating a lot of momentum there in this market.

And also, here in Europe and also in partly covering the Middle East, we have upcoming stricter regulations for oil and gas operations in Europe. But even more importantly, the European Union is one of the biggest gas buyers in the world, and the EU is implementing an import regulation that also has an impact on methane production, forces people who want to sell to the European Union to manage their methane emissions.

Now where in the oil and gas industry, do we want to measure and mitigate methane? So we see here a nice picture of the oil and gas value chain. And the biggest part of methane emissions comes from what is called in the industry, as the upstream segment, so the production of oil and gas. So you see here on the right, a classical picture, these horsehead pumps in the West Texas Desert, actually how it looks like there. Those are typically oil and gas production sites.

You have more than 100,000 big ones that produce a lot of oil overall and gas. And overall, you have roughly 1 million active oil and gas sites, a lot of them in the U.S. These gas sites are typically the size of a few football fields. And they have these pumps, they have tanks, they have separators and you would put a few sensors on them to monitor them.

Now moving more towards the consumer. There is a big segment that's called the midstream segment. So this is the transport and processing of oil and gas. And these sites are much more complex, much more equipment, they are roughly a bit more than 10,000 sites of this worldwide that also needs to be monitored because they significantly contribute to methane emissions.

Then there is a third interesting segment that is offshore production, which has very specific requirements. These are huge installations, obviously, and they are a bit more than 1,000 of them worldwide that are interesting for monitoring.

Now if you look into methane monitoring, there's a very specific and interesting problem and that is, how do you monitor such an oil and gas. And I would like to show that showing a very specific graph of how oil and gas emissions actually look on such a site. So what you see here are real measurements from a real oil and gas side, the midstream side over a couple of months.

And if you look at this graph, it's a very important realization that is new for most people who have never seen this, and that is these emissions fluctuate widely. There's a lot of variability. There's a lot of things going on. So you see this huge spike. These are huge emissions, and you see periods where there's almost no emissions. And then again, you see increases. And here, this short increase from oil gas side, that's probably the CO2 emissions of a big village just in 2 or 3 days.

So that's significant what's going on there. And so big picture, emissions on oil and gas site, a lot of variability. There's a lot of things going on. Now the challenge is the current best practice how to monitor emissions is what is called a periodic measurement. Periodic just means you go there once a year, maybe 4 times a year. you do measurement for 5 minutes for 1 hour or so, and then you try to understand what's going on, on this side.

And you typically do that with a drone survey, you do that with a flyover or you do that by using handheld equipment to monitor these leaks. Now there's an obvious problem, and that is you can detect leaks quite late. If you go there once a year, you can be 12 months too late. So there was a leak that's going on for 12 months. You also miss all these emission spikes. You can't see them. And if you want to accurately calculate your total emissions over the year, this can't be accurate by just going there 2 times a year.

So there's a lot of missing in the current best practice of monitoring. And that's why continuous monitoring is very effective, and we see a lot of potential and in there because if you continuously monitor a site and this black measurement curve is actually our sensors measuring continuously what's going on in the site, you have much, much faster detection of emissions. So instead of months, you go to hours and you can accurately report the total emissions over the whole period.

So therefore, we at Sensirion, we focus to become the market leader and one-stop shop for continuous methane emissions monitoring. And with one-stop shop, we mean that for all these assets in the different parts of the value chain, we have a technology and the solution. So starting for upstream, and we have monitors that you can later also see over there that we put on these sites that measure methane emissions.

We have sensors that can be put on offshore platforms that need ATEX or explosion proof certifications. And we have gas imaging technologies that are very well suited to monitor emissions on complex sites. And we also have solutions and instruments that monitor gas composition in the gas stream and the gas transportation. To make it a bit more tangible, I will show you very concrete examples because I'm not sure how many people already have been on the oil and gas sites. It's very interesting, very interesting experience.

So this is an example of one of our technologies. It's a gas cloud imaging technology, so a camera, but the camera for gas. You can see it over there in the back. This is installed in the West Texas Desert on a -- it's called a central tank battery where you collect oil and gas. And what you see here is on the right side, the picture that you would take with a normal camera, a visual camera. And on the left side, the picture that you would take with the gas camera.

And in the gas camera, very nicely, you see very clearly an emission from a tank top. And this is actually what we provide as as a picture via cloud interface, via data connections to the operator of this oil and gas site, and they can then look at the picture, identify the root cause and take action accordingly.

So what we're offering as connected solutions is also where the name comes from is not only the central technology, the central nodes, that's the basis, that's our baseline, but we offer a complete solution that we are able to deliver these insights, these pictures, these information to the end customer, to the oil and gas operator who then actually fixes the leak.

So we have as a basis, very accurate sensing technology based on a lot of Sensirion technology. We have defined around that a robust IoT node. So you can imagine that these sensors have to survive for many, many years in the desert in Texas and also in the winter in Canada with minus 40 degrees. So it has to be very robust, very reliable. And on top of that, we build a lot of data analytics for the quantification and localization of these leaks.

We build just corresponding software interfaces. So it's all the cloud-based infrastructure to support these operational workflows of our customers. And in the end, we also provide customer and field service locally in the oil and gas regions.

Where do we stand in this journey in terms of markets and regions? At the moment, we focus mainly on the North American market because it's by far the biggest oil and gas producing region in the world in terms of number of sites, but also production volume. So mainly the U.S. and Canada, but also Europe because of the strict regulations and the Middle East are interesting markets for us to come.

Now in the U.S., the main drivers are, as I said, the state regulations, hopefully, at some point in the future, again, Federal regulations that would be very helpful. But also, we see that all the global players, they have their own midterm agenda. So someone like Exxon has emission reduction pledge that goes until 2035 or 2050, and they reduce their emissions over time. And we already see that LNG exports to Europe because of the European import rules are very important for the U.S. and therefore, methane reduction becomes a driver there as well.

We have multiyear contracts and big deployments with 3 of the top 20 oil and gas producers in North America, and we have a lot of pilots to fill our pipeline. Canada at the moment is an emerging market because of the new stricter regulations that are currently being implemented. So we are already present in Canada for quite a while. So we are proven in these minus 40 degrees environment with multiple small-scale deployments, and we see now more and more interest in pilots and testing to be able to address the upcoming new regulations.

And also, we see more drivers in the U.S. So there are new regulations, as I said, there is this OGMP partnership that drives, for example, adoption in the Middle East. And there, we have multiple ongoing or upcoming pilots. Now to summarize, why are we positioned to win in this market? First of all, we are supporting with full solutions a megatrend that is reduction of greenhouse gas emissions. We have positioned ourselves as a one-stop shop for continuous monitoring, which is very attractive, in particular for the bigger operators who have assets along the whole value chain, so they need different solutions. We own the whole value chain from the standards to the complete solution, including the analytics and software. At the core, we have very strong core technology, sensing technologies based on the Sensirion heritage. We have a strong local presence actually in the oil and gas markets. So we are present in America, in North America, in the U.S., in Texas and in Canada.

And this whole business model is an attractive service business model where you typically have multiyear service contracts with these customers. And with that, I hand over to Martin.

Thank you, Felix. Now what does all these examples, those 4 examples that we have seen have in common for the market deep dives, brings us back to our playbook that Marc presented beforehand. We have seen technology ownership. You have seen that we have a broad-based technology portfolio that we can master these applications that were just presented. And we have also seen for all these applications, we do have market access. We work with leading OEMs together to understand their problem to make sure that the technology portfolio fits the needs of the very specific application. And very importantly is that we have a structural tailwind because these are emerging applications in megatrends that we can unlock with mission-critical smart GaN sensing solutions.

And with that, I would like to continue with financial performance and our capital allocation. First look at the historical financial performance, then look at capital allocation and also on return on invested capital. Now if we look at the financial performance since IPO, that's also what Marc has shown on his slide, we can see that we have a growth of 13% in constant currencies over the last years since IPO, supported also by an average adjusted EBITDA margin of 17%.

And this underlines our business model, our go-to-market strategy on the past side, but it also shows our cost or our balanced and disciplined capital allocation in the past. With the growth field that we have presented before, focusing on mission-critical application, having market access, having the technology portfolio and supported by secular megatrends, we're convinced that we can continue on this trajectory going forward.

Now also Marc mentioned that before, we had volatility in the revenue given by external forces, COVID supply chain disruption and so on. And that definitely also translated on the earnings profile. And there, it's our ambition also to build resilience into the earnings profile going forward, and that's what we have been working on also in the last years.

I would like to walk you through some of the levers that we have in that field, and it starts also with the innovation and the strength to innovate and with that to solve mission-critical problems, have solutions that create the top line growth that's for us very important to create their stability and strength in the earnings profile.

Then we can leverage our market leadership that helps us on the gross margin side because of dominance, we have strength there as well. And heard also here often is the full value chain control from components to the solution with the customer. We control that from the supply chain with our suppliers to also where we manufacture. We are also enhancing the cost structure flexibility. For example, our A2L sensors for the U.S. market are produced with contract manufacture in Mexico.

So that helps us on the flexibility, and we also established and going forward with that in other places. You heard this also before, we internationalize our footprint on the manufacturing side, almost half of the revenue is generated with end products not anymore produced here, the core, yes, but the product module and so on, not anymore, can be Hungary, can be in China, can be in Korea, so to internationalize footprint that helps us on the FX exposure on one side, but of course, also on the cost structure overall.

And naturally, we're also going with adoption of AI that helps us to create flexibility in the cost structure, capitalize on that and of course, continued automation and optimization throughout the whole P&L. Now another important aspect for diversification is the diversification across markets, the diversification across regions and also across the customer segment. So we do not have a single dominant customer that we rely on or a single dominant region that we rely on.

We have the highly diversified setup across these 3 elements, and that creates stability, it creates resilience because, for example, in the market, there are different drivers and that helps to create the stability. We have also seen very different deep dives beforehand from HVAC to connected solutions, medical and automotive. So this will continue this diversification, which is important for our resilience.

Importantly, if you go back to the -- our edge, the technology fundament, they can serve all the markets, all the regions and also the customers. So we have there a fundament from which we can serve in this diversified markets. Turning to cash generation and the balance sheet and with that also capital allocation strategy for us. If you look at the past, we had a strong cash generation.

We could fund many of our investments through the -- through operating cash flow and free cash flow. We have very significant cash generation, which enables us to fund our growth investments. If you look at our capital allocation strategy, it's for us important and the focus to use that for organic growth. So organic expansion is our primary capital allocation priority. We also have, thanks to the strength of the balance sheet, significant nondilutive funding capacity for M&A activities.

If you look at our M&A priority, it could be regarding to technology acquisition if we see we unlock there maybe an adjacent application to -- in existing markets that we focus on technology acquisitions, but it can also be to enter into new market segments, expand market segments where we then can make an acquisition in that field or the combination that we have seen in the case of [ Kuva ], where we gain the technology and also an expansion of the market access.

Overall, we are committed to a conservative leverage profile over the cycle that helps us to, on one side, maintain flexibility, but also again, resilience. And capital return strategy, we will reconsider that when surplus liquidity exceeds attractive investment opportunities on our side. At the end, it's all about value creation and their return on invested capital is an important parameter for you, but also for us.

When you look at our historic ROIC, we achieved an average ROIC of 17%, which is well above our cost of capital. And therefore, we could create the significant value throughout the last year since IPO. And therefore, also our ambition definitely is to strengthen that. And we have clearly identified also areas where we can work on to further enhance the long-term value compounding of Sensirion.

Predominantly, of course, we can leverage the technology and the market leadership. That's what we have presented to you today, some parts of it to unlock the growth areas and to capture also eventually the benefit of scale with that. We continue to execute on strategic initiatives to structurally strengthen the earnings profile. I've presented them beforehand to you. And of course, also there is leverage on increasing the capital productivity by reducing it across the organization, which will free up additional resources on our side.

And of course, there is also a potential to refine capital structure to lower cost of capital, while, of course, for us important, preserving the strength on the balance sheet. And that brings me back to our midterm guidance, which we are today reaffirming and confirming. So that means that we see a revenue growth in the low to mid-teens as communicated already in the last Capital Market Day and throughout the period after and an EBITDA margin in the mid- to high teens.

What we have done, we have demonstrated the ability in long-term growth value creation over the last period. And of course, with an ambition also now to increase the earnings profile enabled by our strategy. Gross margin resilience is important to us, and it's structurally embedded also in our strategy. So mission-critical, you heard a lot about the mission-critical applications that we serve with the growth field, the regulation-driven applications.

Of course, they help us there on the gross margin resilience. Also by being a market leader. We have a clear capital allocation framework that we employ and that ensures also a discipline and, of course, value-creating deployment of our capital. We have a healthy financial foundation on the balance sheet, but also a strong cash generation also to fund future growth of the company. And with that, with the confirmation of the midterm guidance, I would like to hand back to Marc.

Well, we come to the end of the presentation, and we will like to hand over to you for questions. A last statement from my side, more probably on a metal level also to kind of a food for brain for you. If we look forward, there will be one disruptive change in the world, unfortunately, not driven by Sensirion. This is AI. AI will not only make our work more efficient and especially will also reduce the access or it simplifies the access to software and to code software that everybody, each engineer can actually code software, not only the dedicated software engineers.

And the easier it gets to code software, the more important is actually to focus on those elements where software is actually working on. And these are data and where the data comes from, from sensors and from the hardware. We used to have a time in the past where hardware was actually boring. The new world is about software. I'm deeply convinced that we will see in future a higher focus on hardware, data generation rather than on software because software will remain important, but it can be coded and produced by almost everybody, thanks to AI.

This is more on the metal level as my final statement today. And now I'd like to ask my colleagues to come on the stage to be ready for your questions. And I hand over to Lars to moderate the Q&A session.

Thank you. As I said before, we wanted to start with questions here from the audience, but I would also like to send a message to the online participants there is a question online. It's a financial question. Marc, Sensirion has never paid a dividend. It's understandable as a startup, but now Sensirion has grown up. Can you please elaborate on the future payout dividend policy?

Indeed, it was shortly mentioned by Martin. We create value, and we create good cash conversion even last year. And we have a very strict or clear strategy how we like to allocate this cash, which was generated. First of all, we like actually to reinvest into organic growth because organic growth it turned out to be a pretty good profitability in terms of ROIC. Afterwards, we like also to strengthen our position whenever we see some selective M&As, mainly with market access reasons or for technology ownership. And in future, if we see that there is a surplus of cash, which cannot be either invested into organic growth in a reasonable and profitable and value-generated way or invested into M&A in order to strengthen the company's position for the future, then definitely we will reconsider our dividend policy.

Maybe another online question. Martin, can you -- Marc, can you please elaborate on -- given the building of the clean room on the CapEx expansion, elaborate on growth CapEx and maintenance CapEx for the years to come.

So I can comment on the CapEx requirement for the building.

Audience have seen built that cash out this year and next year, a total of about CHF 40 million in CapEx split between those 2 years. Of course, there is also some part of equipment after it as a part for the construction of the building. The others we don't disclose.

Maybe also here to the audience to see if there are any questions.

The chemistry of the batteries the [ runways ] you talked about lithium-ion technology. What happens if the market shift towards solid EV or solid-state batteries? How are you positioned there?

Yes, we see this happening also with our key customers, and we are engaged in different sensing technologies on this topics.

It's needed for all of them? Or is this lithium ion the most dangerous.

Lithium ion is at the moment, the most dangerous one and the most prominent one is the problems. And also for solid state, we are engaged in early sensing demand discussions.

Can you quantify the use of [indiscernible] and secondly [ 49% ] expansion [indiscernible].

The potential -- sorry, I can't quantify it because it can be really huge. I can -- you might have even more information about investors' view on AI and on the rates to higher bandwidth and optical communications. But to quantify that in revenue it's simply not possible today, especially because it's not just about the size of the market. It's also about the market share you can win, about the technology market fit and all this there are so many elements are not yet clarified fully that it's too early to speculate, not even internally. It's not a question of disclosure. It's a question of speculation, which is actually the potential at the end of the journey.

Is there markets opportunity. You just say the market opportunities. What do you mean by [indiscernible] market opportunity.

Thinking about market size and market share is market potentially -- and market size. so I was just wondering whether you could scale the market size. It's just too early. That's also the reason why we are not going to talk about the future growth areas and Lumiphase is an exception because of this shareholder situation. But it's too early to speculate on the market potential there.

And still in the risky phase. It is still in the risky phase. And on the shareholder situation.

The shareholder situation at the moment, we have 49%. We have 2 more seats out of 6 seats. That means -- and we have a real partnership together with the other shareholders and also with the founders, which is extremely important also as a kind of foundation of the company to have the foundation -- the founders on Board. And at the moment, there is no discussion about going up to higher levels or going down to lower ones. It might happen in the future. But again, it's too early at the moment to plan for the next 3, 4, 5 years. That's really in too early phase to talk about that. All can happen.

[indiscernible] about the 51%, but you take [indiscernible]. Major shareholder.

Yeah couple of question. [indiscernible] continuous monitoring [indiscernible]. How much more [indiscernible] can you also give us an idea about margins [indiscernible].

Absolutely. So let's start with the question about the Middle East, the current politics. So we are actually currently in the phase of planning to start a pilot there to test our technologies in the Middle East. This seems to be progressing despite the difficult local situation. So there are parts of the Middle East they told us last week was at the moment, business as usual, at least in part of the Middle East, but seems to be the case. I mean there's obviously political uncertainty in the weeks or months to come. Hopefully, they will settle it [indiscernible].

Question about margin. So this is -- it's not a pure software service, it's an IT business model. So it has margins that are high on the higher side of the product portfolio, I would say, because there is a strong service aspect which makes it attractive for us. It's not pure software because it's a combination of product. Continuous monitoring versus flyovers. So there are most of the -- commenting first on the regulatory drivers. So most of the regulations allow continuous monitoring to be an alternative periodic measurement. There are a few upcoming regulations that mandate very likely continuous monitoring, the ones in Canada and California, they will be attractive because their flyovers are just not a potential solution.

Is continuous monitoring cheaper or more expensive than flyovers that depends a bit on the type of assets you have. So in many cases, if you have very complex assets like a gas processing plant, you have one asset or two and then you have to schedule a fly. That's more expensive than cont monitoring. If you have 600 small production sites in the Permian, one flyover per year are typically less expensive than continuous monitoring, but also you lose a lot of information about your site if you actually want to reduce methane emissions, still flyover does not help us.

So what we see what people are and specifically also the operators that we have scale deployments is they use the two technology complementaries. So they equip most critical assets with continuous monitoring. And in addition, they make a fly over inventory over their whole portfolio maybe once a year, maybe 2 times a year to get a big picture of the sites. At the moment, we see more complementary adoption.

Before we take more Zurich questions, let's also take some more questions online. Can you please elaborate on why Sensirion was not exposed to the auto downturn inventory correction?

This is based on the fact that we have a very broad diversification through players, different OEMs, Tier 1s, different regions and also different stages of the product life cycle.

And another question from the online audience. When do you expect to have more visibility on Lumiphase? Is it in 2 years or longer? Can you say something about that?

I see it's so tough for you as investors to look into an additional option, which is not included in our financial planning without having visibility. Unfortunately, I have to disappoint you once again. If I knew when we know more, I would already know more today, but I don't. So no, really, again, I the only what you can take with you is we are trying together with Lumiphase to support the race on the next bandwidth in optical communications driven by AI. This can be huge. It can also be a failure at the end of the day because it's a kind of -- like I named it before, it's a dessert. It can be really huge in 2 years, in 4 years, in 5 years, nobody knows exactly because the timing, the market and the technology fit is not yet proven.

And therefore, you can't talk about the time line. But it has also some risks intrinsically due to the fact that this is real innovation and real innovation cannot be planned in a business plan you have to believe in that, and you have to take some reasonable risks. And this is exactly what we're doing without adding the company. It's apart from all what we are doing internally and there also not included in our financial plans, not now, but also not in our midterm guidance.

Back to the Zurich. I ask you for forgiveness, Marc, but one other question on... And it's very interesting, but it's also loss-making. So I wonder if you have an idea on the risk that they might need capital again? And if so, would you participate and anything that you could share there?

Also this at the moment, it's too early to say. Definitely, they will need some additional capital increase, whether we are going to participate at which level or not is not discussed. It's not decided. So it's too early at the moment.

Leak detection market makes me think a bit like could you, at some point, become active in markets that a company like INFICON, example, they are supplying semiconductor equipment market, for example, a big supplier of ESL, semiconductors are done on the vacuum -- or am I completely off with seeing a certain connection that you also have to measure gases there?

Yes, there is opportunities for leakage. So there is many toxic gas in general semiconductor example use cases again in the infrastructure. So there, we may have kind of continue from the [indiscernible] devices over there. So yes, there is potential, but it's one of the many things we have not talked about.

And, for example, INFICON checks whether a battery is

not leaking when it's produced. So that's not a market you're currently looking at you would see a continuous monitoring once after using the car. That's where you are focusing.

Exactly. This is a high-volume market.

Can you maybe talk about where you see the biggest differences in 2030 end market compared to 2025, which factors would you highlight? I'm really trying to get this question is where would you see in absolute terms, the strongest growth drivers that could change that mix in.

It's hard to say. There are some projections -- internal projections about the market split and product splits in 2030. And these analysis actually turns out that this is more or less stable. So that means there is no fundamental shift either towards automotive or towards medical or towards industrial applications. And also this is reflected by the pretty broad range of different growth areas that will kick in. Definitely, medical is always moving slower than probably the HVAC industry. This is by nature of these 2 types of industry.

On the other hand, all the medical growth areas already further progressed in their journey compared to some other growth areas. Therefore, our projections tells us that more or less the market split can be on more or less the same level as today.

That also informs your target of a stable margin? Or are there any meaningful changes within the end markets that you highlight.

No, I think already today, we do have a pretty large range of gross margins across the solutions and the components. We also there, we expect to be more or less on a stable profile as today. I don't see fundamental changes.

More online questions. Will the strong development in the area of AI and with [indiscernible] the acceleration of development of software code, will that support drive the sensor business?

I think so. So on the one hand side, it gives us a better chance also to reach out to solutions. They are a combination of the core of our components and hardware combined with software. I think one good example is connected solutions today. The core is software -- is hardware, sorry. But at the end of the day, there is a lot of software to be written, and this can actually be done easier in future or even today compared to probably 5 years ago.

So for us, on the one hand side, it's a facilitator AI to reach out to those areas. We are not the experts. This is the software, but we need in order to provide comprehensive solutions to our customers. On the other hand, it's -- the hardware is not that easy to own for those potential competitors. They are the experts in software, but they now have to reach out to hardware in order to provide comprehensive solutions to their customers. So we have there a strategic advantage because we are the owner of hardware and software gets easier. And for the software companies, it's hard to gain the expertise in hardware. So this is actually the way how I see the future. We will see probably in 5 years, we can look back and say, okay, it was right or it was wrong.

Online question is a financial question. The ROIC has been presented and the question is, does the ROI calculation include or exclude goodwill given that you report according to Swiss GAAP FER?

I would have to look into the details that we can pull up after.

And looking at the audience here and [indiscernible]. Do you see currently any impact from the supply chain?

No. we don't see a direct impact. There are some concerns about the energy supply in Asia. But at the moment, also supply chain is fully stable.

One question on A3. I was just wondering, you mentioned that one of the driver is also regulation in the EU, potentially in the U.S. potentially in China. But nevertheless, you forecast a very gradual ramp-up of that business. Why is that not a major regulation in the EU trigger much more faster adoption?

I can answer that maybe with the example of the EU precisely. So the regulation stipulates or mandates the introduction of the exclusion of A2L over time frame between 2027 and 2030. So you start first with the heat pumps that a certain amount of refrigerant inside and then you go to the next type of systems and so on. So already in the EU is spread over several years. And if you have the several countries and several spreads, so that's why in the aggregate, we assume it will be. I wouldn't say that there could be a surprise that there's a big somewhere, but that obvious still in there.

Let's take another online question. Can you please elaborate on the risks from China competition being on the chip side, on the module side or solution side?

Well, indeed, China is a challenge. China is also an option an opportunity. I'd like to start first with the opportunities before we talk about challenges. I think China is still today a very dynamic market. We are present. We like also to increase our presence to serve our customers locally as much as we can, also in A3, but also in a lot of these growth areas, we do have a great partnership with Chinese customers.

And what it turns out, and that brings me also to challenges is on the one hand side, also Chinese companies, they appreciate to have real sensor experts at their site and innovative companies. And then they don't mind to work together with non-Chinese companies. There are some exceptions if there is especially in automotive, there are some local OEMs that don't like to work together with non-Chinese suppliers. But in general, whenever you can create value for these companies, and this is not that different to European and U.S. companies by innovation, by support, by application and standard expertise, they like definitely to work together. There is one challenge. We can also become better. And this is a statement I repeat again and again and again, they are extremely fast.

And we have also -- not we as whole Europe and U.S., if we like to win in China, we have to be faster and in the iterations to serve the customers. That's also one of the reasons why we shift more support for Chinese customers to the Chinese region in order to match the expectations of our Chinese customers. But in general, I see the challenges, but I see even more the opportunities for us in the Chinese market.

Another online question. Could the shortage of helium get a problem -- become a problem for Sensirion's production?

Of course, we looked into that and we are aware of that. But at the moment, we don't see. We also don't consume so much helium on our side. Is it affecting eventually the whole industry, we don't know, but on our side, no.

Maybe another smaller one on market share. I mean you have very high market share, [ 50%, 69% ] in the general segment. Speaking about the new segments you're moving in, what is the kind of minimum level you try to achieve and what the most likely different growth areas you presented.

Our ambitions are 100%. No. It's highly depending on the fragmentation of the market. So some markets, it's easier to get very high market shares because fragmentation is low and you have just to win 3 or 4 big guys. And in other markets, you have a huge long tail of even small customers, you probably not -- you don't like to serve directly because they are too small. And -- but at the end of the day, we always strive for market leadership. And that implies 30% up to 50% of market share is our target. Whether we are successful in reaching this level, is still open, but this is at least our ambition. And even then, we are not relaxing even with 50%, the good example is humidity would like to expand it even more. And then at the end, which I come back to my very simple answer at the beginning, 100% is the very end.

[indiscernible]

Regarding the transaction risk lower than in the P&L, you're now investing here CHF 40 million that you want to actually internalize the cost allocation or cost footprint. How do you do that? What do you have in mind there? And then I would have a second question on the balance sheet.

Here, we are committed for as a main hub also where we are. And the second clean room makes sense to have it also to another to benefit from synergies. And component manufacturing will be here and also like in the past. So of course, we need it for capacity purposes, but also for redundancy purposes as we have. But nevertheless, we have seen that we have customers internationally. So we are serving them internationally. And with the growth, of course, we more and more serve them internationally. But then also we have already now R&D, for example, in Canada, but also in other places of the world.

So that's another part where definitely we can internationalize and then also all the other functions that we can grow into more of a network organization.

No other large projects like manufacturing.

So Hungary is and will remain an important manufacturing site for that one. And of course, there, we are going to invest in future ramp-up of products. We shift either from here to Hungary product lines, but also start new products directly in Hungary. So it will be definitely a big and an important location for us for future manufacturing growth.

And then the second question on the balance sheet is on the financial side. You mentioned that you wanted to decrease the cost of capital -- what did you have in mind?

The ambition also to that one and that we have potential. But today is not the time to have the complete strategy there, but definitely the ambition. But for example, also this building here, we can also see how we finance that going forward.

So I think the autonomy marketing in very interesting. So you mentioned mechatronics can make reliable with your sensors. There maybe a chance to also scale that in the markets. In automotive, you have wire, right? -- [indiscernible] mission-critical things that I'm kind of thinking from myself, why haven't people used that before in other measure for humidity damages.

And so couldn't there be a market or other markets where you could just convince us to say, hey, a little tiny we put in and we can then kind of guarantee or measure better that it works all the time.

That's a perfect question. And I hope I put the answer with the humanoid robot there. We clearly focus on the high-volume markets because the rest will follow. But this is one of the bridges we will take looking into one of the next big manufacturing autonomous manufacturing equipment, which will become autonomous. So this is one of the adoptions from a clear automotive focus to a broader focus in the industrial revolution.

I'm talking not just on autonomous, anything that is mission critical in the market as well too. No, we have this already.

This is already in place in different niches, but it's not that high volume already. We have this. For example, if you do explosion with sonars and so on, you will have [indiscernible] monitors inside these devices to make sure they will function rightly when the explosion happens to scatter the backscattering acoustic wave. This is one of the examples, but it's not high volume, but we have this proof of principle there to scale into the high-volume applications.

Add the one. So these are often a bit niche applications. If you [indiscernible]. If you integrate that it can become attractive. And that's, for example, the case with Connected Solutions where we don't sell methane sensor. We don't sell the methane instrument. We sell the end-to-end solution and then it's where we can capture the most of the value.

I'm not an engineer. So I [indiscernible]. I don't know how much of a problem for any type of machine order or community potential is for breaking down. But if it is a big issue, then putting a sensor there could provide that. I don't know. The answer is yes.

Good. Any more questions here from the audience.

I also don't see any additional online questions. And with that

I would like to hand over to Martin quickly to me.

Thank you all for participating today. I hope you take some things back what you heard. So that not forget us in your home that we just briefly touched on it in the presentation on HVAC. It integrates basically a lot of our sensors into one compact right? And again, iterates our playbook. We work with the customer. They know nothing about sensors. We very closely to make that happen. Everything inside comes from us with our portfolio of sensors and supporting again on this megatrend.

It was very difficult to get them to this [indiscernible] today because they are always sold out at the moment. We had to put some [indiscernible] to get them even from Germany. So that's maybe as a wrap-up message from my side. And with that, I think we can go over to the buffet and continue the discussions there. Thank you all for joining today.

Good morning from Zurich. Dear ladies and gentlemen, we would like to welcome you to Sensirion Holdings AG's conference call on the results of the full year 2025. From Sensirion, Marc von Waldkirch, Chief Executive Officer; Martin Wirz, Chief Financial Officer; and myself, Lars Dunnhaupt, Director, Investor Relations, are present.

In addition to the financial press release we issued earlier today, we will be referencing a slide deck during today's call. The PDF of this presentation can be downloaded from the Sensirion's Investor Relations website under Results and Reports. As we begin, please note that this conference call is being recorded and that all participants are set to mute.

During this conference call, we will be making forward-looking statements regarding future results and financial performance of the company that it can involve certain risks and uncertainties. The company's actual results may differ materially from the projections described in such statements. So please take a moment to read this.

Marc will begin today by covering the highlights and business review for the full year 2025. Next, Martin will comment on the financial performance for the full year '25. And then Martin will turn over the presentation again to Marc, who will address our financial guidance 2026. Afterwards, Marc and Martin will answer your questions. In case you're sitting here in Zurich, it's very easy, please just raise your hands. And for the remote participants, please use the Q&A tool in the GoTo Webinar app, I will read out the questions at the end.

And with that, I would like to hand over the presentation to Marc.

Thank you, Lars, and a warm welcome from my side as well here in Zurich. Thank you for joining this morning for the financial results.

Well, so 2025 marks a significant step-up in revenue, but also in profitability. On the other hand, 2025 also marks a return to normality. After the overwhelming pandemic years of 2020 up to 2022 and the pretty challenging 2023, we are back to normal level in terms of profitability, but also in terms of the underlying business. That means the underlying business has no special effects anymore, neither positive special effects nor negative special effects. And I think that's an important first message to all the investors.

Secondly, if we have a shorter look at the underlying business. On the one hand side, we were able to capture the market leadership in A2L last year. This newly emerging market established last year, we could actually gain more than 50% of the worldwide market share for Sensirion.

The growth was not only driven by that. The growth was supported by a very broad support across all the markets. All markets recorded growth in local currency, 3 out of 4 end markets even at a double-digit level. That also underlines the pretty strong resilience in terms of diversification, either in regional terms, but also in market terms.

And a first look ahead to the midterm view. Last year was also marked by a significant progress in our growth areas. They get more and more concrete now. And we also invite you to Market Insight Capital Market Day in mid of April, April 14 to have more time to also look into these growth areas across all the markets.

The guidance 2026, I will comment in more detail at the end of the presentation, but already first glance on that, we expect to continue to grow this year, 5% to 12% on an adjusted base for the foreign exchange rates compared to the Swiss francs. And on the other hand, we expect to keep our profitability level on a stable level in line also with the midterm guidance.

I'd like first to walk you through all the 4 end markets and to comment the dynamics in all these markets. To start with automotive. Automotive recorded a pretty small growth in local currency, a small reduction in Swiss franc terms. This also reflects the fact that we are deeply engaged in the Western automotive industry, which is at the moment, probably not the most dynamic one. We do see, but also on the other hand, strong momentum for the future years to come, especially thanks to the transition to e-cars and new emerging applications.

We are deeply engaged in battery management systems, where we have also recorded first nominations. They will contribute already 2026 with the first programs. We also engaged in the refrigerant leakage that's more or less the same as we are going to talk about with the industrial markets, the HVAC market. But in cars, it's more based on propane or CO2 rather than on A2. But at the end of the day, it's refrigerant leakage monitoring for air conditioning systems in cars.

And last but not least, there is a very promising new application around about assisted driving systems where the reliance and the reliability of the systems, all the LiDARs, the cameras, but also the brake by wire and all this stuff has significantly to be leveraged, to be increased in order to fully rely on these systems in case of fully autonomous driving cars.

And whenever it comes to water ingress or any kinds of talking effects for the cameras, this is a potential risk for the driving for the autonomous driving cars. And this is a very important new application in terms of humidity and water ingress monitoring.

Medical. On the other hand, medical, a pretty turbulent market in the last couple of years due to the pandemic on the one hand side, but also due to this quality issue of Philips, you might remember 3 years ago. Also here, we are back in normal levels, also in levels they are comparable to the pre-COVID situation with respiratory applications.

On the other hand, we are working heavily on a full bunch of different new applications where we are going to leverage our very strong market position in flow rate measurements for all kinds of medical applications. So we are #1 in ventilators. We are #1 in CPAP industry. So all where we are going to measure the flow rate going into the patient or coming out of the patient.

And now the next step there is actually to combine to leverage this strong position together with the portfolio of gas-sensing technologies we do have in the company in order to provide more than the flow rate only, but also to provide information about which type of molecules comes out of the patient, how much oxygen is in the breath -- out breathing air, how much carbon dioxide is in the out breathing breath. And this together, not just 2 sensors measuring these 2 figures, flow rate, but also the composition in parallel, but to bring these 2 parameters together in order to get more superior information, this is actually the next step we are targeting.

Industrial. Industrial, the market, which is pretty highly diversified within the market itself, on the one hand side, we do have the HVAC there. We have, on the other hand, semiconductor business with gas-metering business in industrial. And over the whole bunch of different applications, we recorded a growth last year. Definitely, the main driver in industrial for this huge step-up of almost 50% in local currency was driven by A2L. I have a special slide on the next page about the A2L business.

But there was also a contribution from new innovations. I think also that's important to highlight today. On the one hand side, we started the business with methane emission monitoring some years ago, and they contributed first time significantly to the growth in terms of revenue. But also our gas-chromatograph solution acquired back in 2021 also contributed to the growth of this market.

A short look forward to the growth areas in the next couple of years. On the one hand side, thanks to our strong position as the leader, the global leader in A2L, we can actually continue our growth there. On the one hand side, because Europe and Asia is transitioning to A3, so to the next candidate of refrigerant leakage, which comes with an even lower GWP than A2L.

While U.S. will stay for years with A2L. So there will be a kind of a separation of the market, A2L in U.S. for definitely more than 5 years from now on. And on the other hand, the transition in the next couple of years in Asia, mainly China and in Europe to A3. And this gives us a huge additional potential for the next years to capture not only the U.S. market in terms of A2L, but also the China and the Europe market in terms of the A3 leakage detection. First products are already on the market. They are serving pilot products of our customers, but it's very important now already to win these sockets in order to fuel the growth in the next years to come.

One special slide about A2L. I recorded some kinds of confusion, especially at the financial markets about the future of A2L. It was -- still there are some rumors around that A2L was a one-off business in kind of a refurbishment of all the existing air conditioners, and that's not the case. A2L monitoring systems or leakage sensors are built into new ACs, not in old existing systems. They cannot be changed. So that means that that's extremely important to underline, A2L business came to stay, and it's not a one-off effect.

What I illustrate here on this plot is the way how it has evolved last year and how is it expected to evolve in the next years to come. Back in 2025, we had this kind of front-loading, this strong H1. Front-loading is actually effect which comes with all new products. Typically, you can't see that in the corporate figures because all these ramp-ups are diluted by all the other business. A2L now was a special case because all our customers start at the very same time. And therefore, you could record this kind of front-loading in H1 last year.

Front-loading means that the customers order more than they can immediately consume because they have to fill the pipeline, the supply chain from there downwards. On the other hand, front-loading means also to mitigate the risk to derisk the ramp-up in order to be on the safe side in case you have any kinds of suppliers, they cannot support you accordingly.

Front-loading means also that there will be another phase where they start to optimize their inventory. And this happened in the second half of 2025, also illustrated here. What is expected to come this year and the next year is actually that we can now come to a stable contribution to the top line of Sensirion's business because now the front-loading has come, but also the inventory optimization has come. So all in all, we expect this year to be more or less on the same level in revenue contribution than last year and the years to come, a moderately growing business with A2L indicated also on this slide. But the main message here again is A2L came to stay, not came to vanish, to disappear again.

Last but not least, consumer market, our smallest end market. This market recorded significant step-up by almost 50% in local currency, driven by a pretty broad number of customers, mainly served by our distribution channels from China up to U.S., also in Europe, we do have very interesting and promising accounts served by our consumer market.

This market is additionally fueled by the miniaturization of our CO2 sensors. So there is the chip-based CO2 sensor now available on the market, unlocking and enabling additional applications that were not possible to serve before because of form factor reasons, but also cost reasons. And now they are enabled by the miniaturization of our solutions.

What we can now serve is we can support our customers across the whole value chain of CO2 measurements from very highly reliable and very precise sensors down to the pretty small, very cost-efficient chip-based solution according to the application, according to the preference of the respective customers. And also this will support the growth in the consumer markets in the next years.

Before I hand over to Martin to discuss the financial figures in detail, I'd like to highlight 2 special effects -- not special effects, but special topics, which are extremely important in the times we are living. On the one hand side, it's about the resilience. And the other topic afterwards is a short comment about the strategy for the next years.

First of all, about resilience. We all know that we are living in extremely turbulent times. And the more turbulent the world is, the more important is also to strengthen the resilience of the business model. We are systematically working on this topic on the resilience of the business models across the whole value chain, starting first with the markets. So we are fully committed also to continue our diversification in markets, but also in regions. This was the case in the last couple of years. This will also be the case in the next couple of years. Therefore with a look at the growth areas, they are evenly distributed across all the markets. So there is no indication that we will become very exposed to one specific market, which would reduce the diversification. So that's also the future.

In technology, we are working on the fact that we have the full value chain under our control. Typically, we start with the chip design, and we can go up across the whole value chain up to the algorithms, to the way how the sensor data are compiled at the end of the day. And this full control of the technology stack gives a high flexibility, high agility, but also a high level of resilience because we are not depending on any kinds of partners.

In operations, we have built up in the last couple of years, that's pretty new. We have built up a global network of manufacturing centers. So we are producing in Switzerland, but we're also producing in Hungary, in China and in South Korea. And additionally, since 1 year, we have a manufacturing partner, a strategic manufacturing partner located in Mexico to serve the North America market with our solutions.

On the other hand, we do have -- as a semiconductor company, we do have a kind of an exposure to the Taiwan area due to the origin of all the CMOS wafers. In order to mitigate this risk, we are running a pretty high level of wafers here in Switzerland in order to have the flexibility and especially the reaction time in case of any crisis in the Taiwan region.

Additionally, we're also working on the fab transfer to have a double sourcing setup for the high-volume wafers, not just from Taiwan, but also from another fab, which is in Asia, but not in the domain of the Chinese government in order to increase the resilience there. These chips are already pretty well progressed, but not yet fully qualified. So we are at the latest stage of the development project also to make them available on the market.

And last but not least, financially, yes, we are a Swiss company. That means we have some kinds of exposure to Swiss francs. Also there, we are working systematically to reduce this exposure in Swiss francs. One of these steps forward is that we are now almost half of our -- revenue is generated by products not anymore produced in Switzerland. So the figure at the moment is 45% of our revenue is generated by any products, either products that produced in Hungary, in Asia or in North America.

The other topic I'd like just to spend one slide about is about the strategy. More will come about the strategy, the growth strategy, combined with concrete growth areas in our Capital Market Day on April 14. But just to give you a very short glance, there is no significant change to the strategy we have already communicated in the last Capital Market Day in 2024.

Our target is to become the leader in smart gas sensing at a very broad base, not just in indirect quality, not just in environmental sensor, not just in humidity, but in the whole bunch of smart gas sensing. To do so, we do have a unique edge. And this unique edge is the fact that we do control the full technology portfolio of any kinds of technologies you need to measure small amounts of gases.

From very cost-efficient chip-based technologies, up to very precisely high-end technologies, for example, the gas chromatography, we are running in the Netherlands. So we have the full launch. We can actually select those technologies, they suit best for the respective application for our customers and to provide tailor-made solutions for these kind of customers.

To give you an example, A2L, when we started to think about A2L, we evaluated different technologies in our in-house technologies in order to select this -- the technology, which is the most suitable one for A2L, and this worked out. The fact that we have won more than 50% of the market share was not just a lucky punch, it was actually based on the fact that we do have the most convincing technology. And thanks to the benchmarking what we could actually do in-house based on the fact that we do have the technologies anyway available in-house. This is the base.

What we are doing, we drive on the one hand side, our core, the core where we are already the leader market-wise. This is the core about humidity, about flow measurement, about environmental sensing. This core drives the leadership, the costs, the volumes. On top of that, we like to expand our business into the broader definition of smart gas sensing into selected mission-critical solutions. There are 3 main topics we like to go into where we are working on, and we will see on April 14, a lot of growth areas, almost all our growth areas are in one of these 3 categories.

On the one hand side, it's about leakage sensing across all the markets, not level limited to HVAC only. A2L was only the starting point, which gives us an excellent platform to grow further. In A3, as I have mentioned before, in refrigerant leakage of cars, but there are many, many more of applications, they are linked to leakage.

Secondly, it's about medical solutions. I shortly mentioned it before, to combine the smart gas-sensing technology we have with the strong market position in flow measurement we do have on the market. And last but not least, it's about industrial safety and efficiency. To give you an example there, it's about methane emissions, but also about a lot of different analysis supported by our gas chromatographs. The last category is typically pretty high end, pretty reliable solutions. More will come in the Capital Market Day on April 14.

I don't like to walk you through this slide. This is more for your reference. I think it's important not just to talk about the strategy, which is far out for the next couple of years. And on the other hand, to look back to the financial figures. It's also important to link these 2 pages together. That means to reflect every time what has been done in the last couple of months in order to execute the strategy we have defined. This slide should actually give you the insights about the progress on the specific levels of strategy we have or we have been executing at the moment.

And with that, I'd like to hand over to Martin for the financial figures.

Thank you, Marc. And also from my side, a very warm welcome. It's a great pleasure and honor to present the financial results of last year. As you heard, 2025 was a very successful year for Sensirion. We have executed our growth strategy, demonstrated strong operational execution, margin resilience and significant cash generation.

Despite a volatile macro environment and challenging FX situation, our business model proved to be scalable and structurally resilient, and this allowed us to convert the broadband revenue growth that you have heard about before into substantially improved profitability.

Now let me walk you through the headline numbers. Net sales increased by 29% in local currencies and 24% in Swiss francs, reaching CHF 342 million. We heard from Marc, growth was, in particular, driven by the A2L business, but also a broadband demand in component business and full recovery in medical. Gross margin improved to 52.3%, and this reflects higher utilization, operating leverage result from our efficiency programs and the benefits of our increasingly globalized manufacturing footprint.

We translated the strong top line into profitability. EBITDA more than doubled to CHF 63.5 million, resulting in a margin of 18.5%. This is well in line with our midterm ambition. Net working capital remained tightly controlled at 31.8% of last 12 months revenue, continuing the ongoing downward trend.

Operating cash flow reached CHF 58.3 million, a material improvement compared to the previous year and cash flow -- free cash flow came in at 24.8% -- CHF 28.8 million despite continued growth investments. Overall, the year demonstrates strong growth, clear operating leverage and disciplined cost management.

On the top line, let me briefly recap the revenue development. The organic growth of 29% in local currency was negatively impacted by CHF 50 million due to FX impact, resulting in a growth of 24% in Swiss francs. As we heard before, what stands out is our broadband growth across 3 of the 4 markets we are operating in. Automotive was flat with no substantial product launch last year, but significant progress was made across our growth fields, resulting in multiple project wins materialize in the ongoing period.

Medical, plus 14.3% with CPAP and ventilation back to normalized growth trajectories and the Industrial segment with plus 47.9%, driven by the A2L market in the U.S., but also strongly supported by the broader industrial gas sensor demand.

Consumer, plus 49.7%, supported the high -- supported mainly by the high demand in the component business across all the regions. And this brings me to the split by region, where we see a significant growth, especially in the Americas with 121%, driven not only by A2L leakage by the overall high demand in that region. APAC stands at 19% and EMEA at plus 6%, reflecting a healthy underlying demand globally. This diversification across end markets and region is an important foundation for resilient and future growth.

Also, the gross margin structurally improved through scale, footprint optimization and our continued efficiency efforts. The gross margin reached 52.3%, an improvement of 300 basis points versus last year's period. The driver were the high utilization across the full product portfolio and in particular, the high-volume component products, but also the ongoing process improvements and efficiency programs contributed and especially a more globalized manufacturing network that increasingly balances cost exposure to foreign currency and the supply chain robustness.

If we turn towards operating expenses, we see that the R&D intensity decreases to 18% of revenue, while investments continued to support our strategic growth areas. So we are scaling innovation efficiently without compromising long-term value creation.

SG&A expenses decreased to 21.8% of revenue, reflecting operating leverage, efficiency programs and also here a continued globalization of our cost base. Our disciplined spending with target strategic investments during this year's steep growth phase is what enabled us to do a step-up on EBITDA margin. And these efforts are clearly visible on the EBITDA performance.

EBITDA more than doubled to CHF 63.5 million, which corresponds to a margin of 18.5%. And this is a reflection of, of course, the strong revenue growth, but also the operating leverage across the whole P&L statement and the result from what I mentioned before, our efficiency programs and disciplined cost allocation. And as Marc mentioned, we are back on our midterm ambition, and this is very important for us. This regained profitability gives us the financial flexibility to continue investing in new growth areas while maintaining a disciplined and healthy financial profile.

Turning to the full income statement. The operating profit EBIT came in at CHF 42.8 million, a margin of 12.5%. This is a significant improvement compared to the '24 results and in line with our midterm ambition. The net financial result was impacted by the Lumiphase participation result and substantial FX headwinds as the Swiss francs continued to be a strong currency. After tax, we closed the year with a net profit of CHF 20.1 million, corresponding to 5.9% of revenue.

Now let me turn to net working capital. We continued to manage working capital with discipline. Net working capital decreased further to 31.8% of last 12 months revenue, which is supported by strong receivable management and payable optimization. Inventory levels at year-end are elevated as they include some timing effects.

Looking at CapEx. CapEx was -- spending was CHF 26.8 million, reflecting our normal investment cycle and also strategic investments, in particular, in the construction of our second clean room in Stafa, the land expansion and our continued development of the Hungarian site. These investments support Sensirion's long-term scalability and manufacturing resilience.

The second clean room in Stafa for capacity expansion and redundancy purposes is well on track to be completed by 2028. Our investment cycle is fully aligned with our midterm plan, and the business is scaling into it.

Cash generation in the financial year '25 is a key highlight. Operating cash flow reached CHF 58.3 million, driven by revenue growth, higher profitability and diligent net working capital control. This corresponds to cash conversion rate of 92%. Free cash flow was CHF 24.8 million despite our strategic long-term CapEx investment. And important for me is that all investment activities, including clean room and land purchasing were fully funded through operating cash flow. This underscores the healthy underlying economics of our business.

Finally, looking at the key points on the balance sheet. Our balance sheet remains a source of strength. Net cash increased by 35%. This reinforces our low-risk financial position and strategic flexibility. The equity ratio remains at a very strong 82%. Our leverage ratio continues to reflect a robust and resilient balance sheet that supports both long-term investment and day-to-day operations.

Now let me conclude. 2025 was a successful year for Sensirion. We executed our growth strategy and grew revenue by 29% in local currencies. A strong operational leverage and disciplined cost management lifted our EBITDA margin by 800 basis points to 18.5% despite significant FX headwinds.

Cash conversion reached 92%, supported by improved profitability and tight net working capital control. We closed this year with a very strong and solid balance sheet, giving us ample financial flexibility and strength for the years ahead.

And with that, let me hand over back to Marc for the outlook of 2026.

Well, thank you, Martin. I can't switch the slides. Thank you -- but it is a technical stuff. So a short look ahead to 2026. We are pretty confident to continue our structural growth. Structural growth means adjusted by the foreign exchange changes, that it means we expect 5% to 12% growth based on an adjusted level of the currencies before because we are impacted or affected by base effect due to the strong U.S. dollar last year. In Swiss francs, the structural growth is somehow damped by this negative foreign exchange changes. So that means we expect 5% to 12% structural growth, and this corresponds to CHF 335 million up to CHF 360 million expected on top line this year.

They are working heavily now on the computer here. Well, in terms of profitability, we target to be on the similar level as in 2025. Again, we are back in more stable times compared to the overwhelming times of the pandemic, but also the challenging times of 2023. So we are coming now looking forward to more stable profitability profile. And again, also illustrated or supported by the guidance given for 2026. That means to expect to be on the same level as this year.

A2L, again, I think that's important to highlight or to underline again, will contribute on a more or less stable level compared to 2025, but comes with a lower seasonality because the front-loading has gone but also the inventory situation has gone. That means we are now on a more stable contribution across the year. In sum, we should actually be on the same level as the year before.

That brings it to the end, and hopefully, they can also fix the technical issues due to the end of the presentation, and we are open for your questions.

So first of all, sorry for the technical hiccup. As stated before, we will now take your questions. We start here in Zurich.

I have 2 questions. The first one would be you showed this evolution the time line of your A2L sales curve. And I was wondering if you could make some comments on how price development or price erosion typically fits into those curves?

And the second question is, if you could give some more indications on your CapEx plans in 2026 and maybe beyond and how the time line of the whole construction project is looking.

I can cover the first part. Yes, there are some price erosions they are typically of a lower single digit per year and highly spread from account to account. This is offset, on the other hand, by increasing volumes. On the one hand side, increasing volumes with the existing accounts, but also especially, we are still winning additional accounts in A2L. Either those, they have started first with competitors of us, and they onboard us now as a second source or in other way, there are a lot of second source situations from the very beginning where we can increase now our share. So this are in volumes, we have a significant growth. In price, there will be some kinds of erosion. And all in all, that brings us to the stable contribution this year and a moderately growing expectation for the years to come onwards.

With regards to the CapEx spending for 2026 and beyond, of course, it's one driver is the building the clean room building that we are constructing in Sensirion. In there, but there are 2 phases. One happened last year, reflecting that result be the planning, but also the first part of the deconstruction of what was there. And now in January, the construction started, lasting about 2 years, that's where the most of the cash out will be for the CapEx side, and that's over this year. And next year, around CHF 40 million for the construction of the clean room. And then, of course, there will be also equipment to that part.

All together, not per year.

Not per year, exactly for the whole. But of course, that's on top of the kind of the normal CapEx.

I think that is first.

Yes. Two questions from my side. You're guiding 5% to 12% organic growth on a much higher base. You mentioned that this growth is driven by a multitude of projects. But can you maybe highlight 1 or 2 projects where you feel the most confident or the most relevant, which is driving that growth?

And the second question will be on A2L as well. I mean, looking ahead, you anticipate share gains just to have a bit of a sense how competitive that market is because I don't know how critical that component is for the end client. I could envision quite a competitive situation dual sourcing and so on. Just don't have a bit of a sense what you're seeing in that market. What makes you confident that youn gain share.

First of all, 2026 was on the growth drivers in automotive, for example, as I thought and mentioned battery management systems, we've got different nominations back in during 2024, but also 2025. The first product until now either Phase to be ramped up. So at the very moment, we have the first programs to ramp up, so they will contribute in automotive to be very concrete on that. In medical, we -- I mentioned that this combination of flow and gas composition, management, gas sensing measurement that was there. The first project will kick in this year already. So also disclosures come more and more to materialization. And also, this will support the medical revenue. In A2L, this will be more or less flat as already mentioned.

In industrial, I see support from the gas chromatographs on the other on the one hand side, to continue to grow. But on the other hand, also about the methane emission program, which is deployed more and more as oil and gas sites and which is anyway a kind of a recurrent business, thanks to subscription models. So I can remember that this oil -- gas, methane emission program is a subscription-based business model that means that comes with a kind of recurrent revenue stream. To reduce distribution consumers, it's less concrete to highlight one project. The only one I can, because it's highly diversified through these channels. One program can probably be highlighted. We can also talk about that because everybody of you is highly invited to buy one of these indoor air quality monitors whenever you visit IKEA. You will get there a pretty smart, very small indoor air quality monitor with a display, which is pretty nicely done by IKEA just buy it because all the sensors are from Sensirion. Also this helps, but this is just one specific product.

The other question, about the competitiveness in A2L. Well, on the one hand side, we have to reflect that this sensor is extremely crucial for the business or for the air conditioner because there are regulations in place. So they have no chance to sell any kinds of A2L-based air conditioners in U.S. without this functionality inside. That means also this is a mission-critical sensor part for the whole air conditioner when this part fails they have a problem even in the field. So the mission criticality is more than obvious. Secondly, it's a UL-certified product. That means it will be hard. There will be high entry barriers for any additional players to come into this market.

Typically, the air conditioner market or the HVAC industry in general is a pretty risk averse industry. And for example, one manager told me a pretty top manager of one of our customers. They told me 1 year ago. This is a heavy transition we have to undergo, this change from A2L. And I hope definitely -- and he was at the age of 50, I hope definitely that this will be the last transition I have to manage up to my retirement. And I think this symbolizes also the way how this industry works. So they are not really enthusiastic about changes. So therefore, I anticipate that the barriers for newcomers to come in due to the criticality of the product, due to the certification by UL, but also by the mentality of this market is pretty high. There will be kind of competitiveness between the 3 players they are in, but I think we have pretty good cards in that terms. Does that answer your question?

Michael?

Yes. Just trying to understand the A3L potential. It sounds a bit closer on the time line than I probably thought in Europe and in Asia. Is that a market similar size of that, what we see now in the U.S., also like the technology that you would use for that, the competitive landscape, just that we can understand a bit what that would actually mean going forward. And maybe if you can, I would, of course, love to hear a bit of an update on Lumiphase. It's like 1/4 of your pretax profit that you are basically investing. I'm not calling it losing. Just trying to understand where are we in this project? Or maybe you can give us a bit color on that?

So first about A3. Yes, the potential of A3 is similar to A2L, but again, not replacing A2L in the U.S. business. It's a more Asian and European business. The dynamics and the time lines for this business is completely different because it's higher diversified in regulations in the functionalities or the applications which comes in. First of all, heat pumps will actually be transitioned to A3. Heat pumps is a pretty small market in volumes. That means this business will not go in advance as we experienced with A2L, it will come gradually from year-to-year more.

First of all, with heat pumps, they are pretty limited markets later down the road with air conditioning, which is significantly larger. What I have mentioned before is what is now ongoing is kind of first nominations, not yet done, but they will come this year. And it's not yet about the high volumes because the higher volumes are not yet in the transitional phase, but it's so important now to win the sockets in order to have a big step into customers' accounts, also to demonstrate the reliability of our own solution. And again, this is the same story as in my answer to A2L, it's a critical, mission critical piece of the whole stuff. That means, therefore, it's important now to make this strategic step into the A3 markets. The revenue and the battery to materialize will come gradually from year to year and not from one moment to the other.

About Lumiphase, I think Lumiphase, there is not so much new stuff to share. On the one hand side, they are progressing pretty well on the technical terms. That means they are -- they do have now their chips in their hands, they work. There are some parameters still to fix. It's not fully done. On the other hand, there is this race against the other technologies, the so called TLM technology. Also they are facing some issues to fix. So there is kind of a head-by-head race ongoing at the moment, which is the same statement that I can do compared to end of last year is that the race is not yet foreseeable where is the first application, where in higher volumes, this technology will be deployed because at the end of the day, they are at the moment one is unclear how fast the technology will change.

And secondly, which of these two technologies do get the higher portion of this cake at the end of the day. What is fully clear for the market also to -- this is also not new, but just to emphasize that again, which is fully clear and fully undoubtful is doubtless as the fact that for the higher bandwidths to come and to be asked by the market. Due to the AI centers, they have to go into new materials. The existing materials, the established technologies cannot support the next journey with the next steps in the journey to tie bandwidth. This is more than clear how fast and which technology with which portion is still an ongoing race.

Maybe 2 quick questions for Martin. I was wondering whether you could give us the '26 growth outlook without FX, without the A2L impact. So we understand what the remaining business outside of A2L is expected to grow in '26? That would be the first question.

The second one on the Industrial business '25, you could also give us the number of the underlying growth, excluding A2L? And maybe for Marc, maybe you can help us understand, if we look at the '26 growth outlook, which is below your midterm outlook, what the bridge is for the midterm. So how do you expect this acceleration in the next couple of years, what are the key levers and the more big picture.

Forward-looking or backwards looking, we don't specify products related to revenue. So therefore, I cannot give you the split into A2L and the business, but it's clear that we are there in the dominant market position, so from the market that we have the biggest market share in the side.

So for competitive reasons, we cannot share the portion of revenue generated by A2L, sorry for that. But what we have indicated, we have more than 50% of the market. So this is at least an indication.

And to the second question about the growth drivers in the next years and the acceleration, I think you're right. If you just focus on 2026, structural growth is 5% to 12% compared to 10% to 15% in the midterm guidance. If we also reflect the 29% this year, it looks different. So in one year, yes, you are slightly below that. On the other hand, also A2L is more or less stable, so not contributing to growth rate in 2026, also diluting some kind of the growth rate figure.

What that generates next couple of years? I think this is exactly the topic of the growth areas. We shortly highlighted and we'll call in more details on the Capital Market Day. This is about the transition to e-cars, which is a lot of programs. They are still pretty small. A lot of these growth areas, by the way, they are -- we have been working since years they are now at the stage to be materialized, but not yet contributing heavily.

So for example, to give an example, battery management. There are already first revenues generate now in January and February, they are not yet huge because it costs more and more. And this will also accelerate the growth past the next couple of years. A3 the same, A3 is concrete is a product on the market that the revenue contribution today with A3 is still intact. And as I have indicated before to the question of Michael has the potential to grow to a level comparable to A2L. And all the details of all these growth sales, all the markets will come on April 14.

Maybe one follow-up if I may. You said you're expecting moderate growth in A2L from '27, what does moderate mean in terms of growth rates?

Moderate as indicated here on the slide, I don't flip back to that. It's still difficult to say because we have this kind of counter play between some kinds of price erosions and on the other hand, some volume increase. But what we expect is a kind of lower single-digit growth in the next years to come.

There are some questions from the online audience. Maybe we'll take them now. First question is around A3, can you talk about the timing of the ramp-up of A3? Is it in '26 or more beyond? And what is your view on Sensirion's market position in this market?

Well, about the time line, again, first products will kick in this year, but at the limited revenue contribution. Sockets will be nominated this year or we expect at least that sockets will be nominated this year but not yet generating revenue because typically, nomination takes some time to make all ready. That means the significant contribution from A3 will come down the road 2027, '28, '29 and '30. So this is actually the journey from year-to-year, more 2026 is not heavily affected positively by A3. And the second question?

Sensirion's position?

Sensirion's position, I think there, we are in excellent positions because the whole world has actually recorded that we are the market leader from the very beginning in A2L and it's not a technology to be applied. But at the end of the day, it's the same application. And it's not just that, but we have also one of accounts in the electric industry. And it's not the case that we have only won just U.S.-based accounts for the A2L business. We have also won Chinese accounts they are serving the U.S. business. And therefore, they are also regulated to design in A2L sensor. And these accounts can now be leveraged also to reach out to the A3 application across the whole globe. It's not just that we have now to navigate to other accounts, they are more or less the same accounts as we already have been serving for the A2L business. And I think that brings us this combination of a proven technology and combined with the fact that we do have the accounts, this brings us to an excellent position.

And then the second online question is, the company is guiding a margin in '26 similar to '25 but also sales margin will be mid- to high teens. So the question from the caller is, should we assume that the margin will be 18%, 18.5%, that what Sensirion has achieved in 2025?

I'd say, similar to 2025. So I would be extremely happy to share this information with you. But honestly, we don't know. The world is too turbulent to guide a profitability level within 0.1%. So that means, we target to be on the similar level as 2025, that indicates somehow [indiscernible] in line with our unchanged and confirmed midterm guidance in profitability of mid- to high teens. I think more is not even in our hands at the moment to disclose because we don't know it. The world is too turbulent to be more precise in that terms.

Are there any more questions here from the audience in Zurich?

Just one follow-up question on the margin discussions in general. We have seen in, I think, in the last 2 years, at an R&D level in percentage of revenues has been clearly below 20% at least in '25, I don't remember in '24. But I remember in your midterm guidance, you also always stated how much R&D you want to spend in terms of revenues? And is that over -- I think it was clearly above 20%, no?

19%.

Okay. 19% is the level that we can also...

Indicated in the last midterm guidance back in 2024.

Okay. So that's the level that we can look at more or less right now also.

To give you some light into that is, we are targeting more the solution business, the specialized business based on our chips. And the chip business typically comes with pretty high R&D intensity, but also with pretty good gross margin profile. While the solution business, depending on the business comes with lower R&D intensity and also sometimes with a lower gross margin, and this is balanced out in a way. This was actually our statement in the in November 2024.

Yes. And it's A2L also well less -- obviously you have lower, obviously, low gross profit margin but lower R&D...

Nevertheless, we could manage it to keep the gross margin above 52%, which historically a pretty good level, even compared to years in the past, where the main part of our business came actually from components.

Yes. And maybe just one last one from my side. You mentioned methane leak testing, which is a subscription-based model. And if I recall it correctly, in one of the last presentations you mentioned a revenue number for that, a couple of millions. So I was just trying to understand, did it grow? And is the business model is still intact with President Trump, not really caring about methane gas, I would say.

Indeed, I think that the business model anyway is intact as the subscription-based approach is fully intact. Definitely, there are some headwinds from the administration, Trump or at least no tailwinds anymore to push the oil and gas companies to invest more into the methane emission programs. But what we see in the market, at least for the large the super majors, so the large globally active companies is there is not only the Trump administration. There is also kinds of investors. There is kind of a brand reputation in the market. There is also European Union. They like actually two import oil and they also have some regulations in place. So there are many, many other players in the market pushing these oil and gas companies to do more in ESG.

And what we also reflect is that or what we see in the market is also the Trump administration has a kind of time line. That means the next 3 years. In the 3 years, it's nothing in the oil and gas industry when it comes to investments. So they think 5 to 10 years forward. That means to summarize it, there is some reduced tailwinds. I wish to have the tailwinds as we used to have before. But nevertheless, the business model, also the way how it goes forward is absolutely as projected.

I would like to ask a follow-up question on your CapEx plans. So my understanding was that the extraordinary CapEx range was guided for CHF 40 million to CHF 60 million. And I was just wondering whether CHF 40 million is now the new CHF 40 million to CHF 60 million probably not because you mentioned there will also be machines coming. So maybe you can give us...

The midpoint there is this a fair assumption?

So CHF 50 million in total.

And stay around that. We still have that range depends also on how fast we build up what is inside the clean room then. So I would say the range is still valid. And if you're there towards your midpoint assumption.

Very clear. Thank you. And I was just wondering in terms of cash outflow, whether you could repeat the timing of the CHF 50 million.

Over the next 2 years.

Okay. So '26 and '27.

'26 and '27 majority part and then some of the equipment may come later towards '28 when it becomes operational, but the majority part is in construction of the building, and that's this year and next year.

And so half would be a sensible...

Yes.

We have another question from the online audience from Sandeep. Sandeep wants to learn a little bit more about the auto market. Question is when will the auto market, we expect the auto market return back to growth? Or do you need to wait for recovery of the non-China markets to grow this business again?

Well, I'm pretty confident that we come back to growth already this year 2026, with automotive, thanks to the underlying new growth areas, mainly battery management, which is the most concrete one, which kicks in first.

Any additional questions here from the audience in Zurich? Checking if there are more online questions. We have no more questions. Then with that, I would like to thank everybody for the interest in the Sensirion results. And as mentioned before, on April 14, Sensirion invites all investors to an investor update in Stafa where we will share growth and markets insights of the end markets, which Marc and Martin have already addressed today. You can register on-site in Stafa or also participate online information are available on our website or just reach out to me.

With that, thank you very much for your interest. And have a nice day.

Thank you.