Smartoptics Group Stock

Good morning, and welcome to Smartoptics' financial presentation, financial report for Q2 2026. It's great to be here. It's fantastic times for us. I hope also for you guys. Most of you should now be enjoying some sunshine. I hope you are, and thank you very much for taking the time to spend some time with us this morning.

Next slide, please. Not only are we delivering a quarter in which I expect us to grow faster than anyone else in the market, but we are also -- we have also started our journey towards the next goals for Smartoptics for the next big things that we have ahead. And thus, we want to spend a little bit of time in this presentation, in this call to talk about that, to introduce our thinking around the future for the company. But as usual, let's turn to the main happenings in the quarter, and I will leave the details of the numbers, with very few exceptions, to Stefan's part where he will cover those in great detail in a few minutes. We can only conclude that we're continuing to have a fantastic Americas, fantastic U.S.A. stellar performance by Team USA. But since a few quarters, we have been discussing an increased momentum and increased traction, particularly around large accounts in Europe. And this quarter, we're seeing the result of that. So also a fantastic Europe with growth in all subregions and fantastic growth in U.K., Ireland and the Nordics in particular.

Our business is increasingly driven by AI and indirect hyperscaler business. And as an example, this is now happening across the globe. So it's in every region we are working with these type of opportunities. As an example, our South African partner, Transmission Co., together with us, are building a network for a hyperscaler in Africa in the quarter. So important momentum there. We can also see that the traction from Q1 is continuing with book-to-bill comfortably over 1 in the quarter, exactly the same scenario as in Q1. Gross margin is a little bit down in the quarter. This is related to one project, one customer in the quarter where we can see that the difference between the lower gross margin in the quarter and a perfectly normal quarter that we've been delivering recently. All of the difference there between the 2 numbers is related to this case. So this is a case that has been restored, that will be restored in Q3 and onwards from a margin perspective, where we are choosing to support our customer in a critical phase where we were undergoing qualification for a number of large applications. And this is a U.S. Tier 2 that is building networks across America. So a very good win and a very good proof point of our large account strategy that is resulting in short term, a little bit lower GM.

We have been talking about this for years that we want to have the flexibility and need to have the flexibility to act in the best interest of the company and in particular, our growth journey when we need to, and that's the full story behind it. So no big drama around the gross margin from my perspective. Quite expected, in fact. Yes. So obviously, we are here in Stockholm today from our new super nice main office location and production and so on and so forth. As you all know, we were talking in Q1 about Q2 being a catch-up quarter, of course, catching up towards a normal Q2 performance versus Q1, and we can see that we are way up there in the upper range of what normal seasonality is. So a very, very good performance. And in particular, bearing in mind that we delivered about 11% of the revenue in the first month of the quarter. So the company was effectively shut down from a delivery standpoint for a few weeks. And the team has performed really, really well. So thank you very much, team operations, for your efforts through the quarter.

So reminding everyone what have we done? Well, we have moved all of our production facilities, the 2 of them, into one. And going forward, the work to make this even more efficient is going to start and continue for years. But clearly, we're demonstrating in the last 2 months of the quarter that our capability is already at a very, very high level. Right. So revenue and the geographical spread. As I said, fantastic performance in America, and there is no doubt it's a record quarter over there, largely driven by the results of our efforts in the large account strategy over the past several years. We can see now that large parts of our revenue still being fairly broad, but large parts of it is now coming from the accounts that we have been talking about, typically regional Tier 2s and Tier 2s. And similar both data center operators and network provider -- network operators delivering bandwidth to the data centers in the region. So very good America. 10% growth and quite expected that we would see a good EMEA after several quarters of having a very good traction and very good win rate in the larger projects that have been out there for tender and similar. So all good.

And as I mentioned earlier, good growth in all subregions, DACH, Eastern Europe, Southern Europe, but stellar performance in the Nordics and U.K., Ireland. APAC is still project dependent as we point out in the headline here, and we can see quite modest growth in APAC. However, what we are seeing in this region, much like the other ones is that the larger data center AI-related projects are popping up in several regions within the APAC territory. And we have developed our partner landscape in the region. We have, of course, developed our product to have a better fit going forward. And we have invested in the region with more people working for and with Smartoptics. So I'm very positive about APAC for 2027 and second half of 2026. Timing is, of course, a little bit uncertain, but I think that we can see a much better performance from the APAC region going forward. So that's very nice to have yet another contributor to our growth.

Product mix. As usual, it is the more advanced products that is sold together with our software and service offering that is leading the way. Those of you who have been with us for quite some time probably noticed that we have shuffled around the order in this slide. So -- and we have done that to clearly outline the fact that solutions, software and service belong together nearly to 100%. So fantastic growth. This is important because it's telling us that where we are investing, we are also achieving growth. So that's always comforting. It is a proof point that our product road map, the products we have developed are the right products for the market. The regions and customers and applications that we're going after are the regions and customers and applications where we can see growth. So very, very good proof points. As you all remember, we have, since some time, also put a little bit more focus on our business area optical devices with Björn Andersson leading those activities for us since quite some time now.

We have been engaged in really upping the performance of the back end of that business, investing into our software platforms, investing into our production tools, investing into the tools that our customers are using to configure these products for their live environments. And we're seeing that much like the previous 2 quarters, very good growth in business area devices, too. So it's no longer an anchor for the company. It is yet another growth vehicle contributing to the overall revenue. So I'm very pleased with that situation. I will hand over to Stefan to take you through some of the details on the financials.

Thank you, Magnus. The revenue increased 54.6% to a record high $28.9 million compared to $18.7 million last year. As Magnus mentioned, we have had very strong growth in EMEA of 112% and in the Americas of 36%, primarily driven by Business Area Solutions. The gross margin was 46.1% compared to 48.6% in last year and 47.0% year-to-date. The lower gross margin is fully related to the breakthrough deal that Magnus mentioned and follow-on business with this customer is expected to deliver normal margin levels going forward. The underlying gross margin remains stable quarter-over-quarter and the full year 2025 gross margin remains as a good reference for future quarters.

We had a record EBITDA of $4.5 million compared to $2.6 million last year, up 1.9% year-on-year. The strong revenue growth increased gross profit by $4.2 million, more than offsetting higher operating expenses. The employee benefit expenses increased 29% to $6.7 million compared to $5.2 million. Main drivers is the organizational growth of 21%, where FTE growth from 132 to 160 people, including the expansion of the U.S. sales organization earlier end of last year. The FX impact is impacting 3% and the annual salary increase and other factors are contributing with a 5% increase. Other operating expenses increased to $2.2 million compared to $1.4 million, reflecting the business growth and organizational expansion. Total operating expenses as in relation to revenue amounted to 31% compared to 35% last year, so an improvement. The EBITDA margin improved to 15.5 percentage points compared to 13.7% last year, and the year-to-date margin increased to 13.8% compared to 11.4%.

If we exclude nonrecurring costs relating to the relocation of the production, in Q1, the year-to-date EBITDA margin was 14.7%, a difference of 0.9 percentage points. The profitability is improved despite continued investments to support the future growth. The EBIT margin improved to 12.5% compared to 9.8% last year. And the year-to-date, the margin increased to 10.5% compared to 7.3%. Excluding nonrecurring, the EBIT margin year-to-date was 11.4%. The operating cash flow amounted to positive $0.9 million compared to negative $0.5 million last year. Positive operating cash flow despite a $2.2 million increase in working capital driven by the higher sales and deliberate inventory buildup to support the future growth.

The balance -- the equity ratio was 42% compared with 53% a year ago and 56% at the end of the first quarter. And the decrease is mainly explained by the recognition of the new Stockholm office lease under IFRS 16, which increased total assets without a corresponding increase in equity. So total assets increased to $66.6 million compared to $49.9 million last year, and that's mainly reflected by the Stockholm office lease addition and as well as inventories and trade receivables that increased in line with the continued growth of the business. The increase in asset was financed mainly by corresponding lease liability to the Stockholm office as well as higher trade payables, reflecting the higher level of business activity.

Despite the dividend paid out during the quarter, total equity increased to $27.9 million, supported by continued profitable operations. Cash ended at $2.1 million compared to $3.1 million last year. We have available credit facilities of $7.6 million, equivalent to NOK 75 million. We have a high focus on cash, included continued management of trade receivables. The working capital increased to $16.8 million compared to $15.7 million last year and up from $14.6 million last quarter. The inventory increased to $21.3 million compared to $16.8 million last year and up from $18.4 million last quarter. And the increase versus last year is mainly driven by longer component lead times and a deliberate strategy to maintain higher inventory levels to secure product availability and support the future sales growth. Inventory quality remains high with a very limited inventory risk.

Trade receivables increased to a record high $26.4 million compared to $19.8 million. This is, of course, then reflecting the higher level of sales. We have had a back-end loaded quarter with more than half of the quarterly revenue invoiced during the final month of the quarter. We have had normal collections and no increased credit risk. The trade payables increased to $12.7 million compared to $7.7 million last year and up from $5.7 million last quarter. We have had higher inventory purchase towards the quarter end and the accounts payable mainly consists of suppliers with 60 days payment terms. Net other short-term liabilities increased to $18.2 million from $13.2 million last year. And the largest item is deferred revenue that increased to $13.3 million compared to $10.7 million. Then we also have the tax liabilities that increased to $2 million, reflecting the higher taxable profit level. Thank you, and back to Magnus.

Thank you. We will now leave Q2 behind and start looking forward into the future and give you a taste of the new financial aspirations and the new strategic choices that has been worked out through the first half of this year. The material here is short and sweet, I hope. And I'm expecting that we will continue to talk about this now for over the foreseeable future and clarify more and more the material and how we're progressing against that.

So the first thing to note is that the ever-growing demand for bandwidth is continuing to drive our business. Our business is -- the growth, the underlying growth is broad-based. But of course, it's impossible to overlook the fact that recent CapEx investments in AI and AI data centers is coming on top of this as an additional driver. Reminding people that building an AI data center on a corn field in any Tier 2 market is pretty useless unless you can connect it to the bigger cluster and to its users. So the technologies that we are working with are absolutely instrumental to make this work. It is, of course, a privilege for us who have been dealing with optical technologies for a longer period to see a second wave of really changing the behavior of the human kind going forward, maybe big words, but that's, in fact, what's happening. Smartoptics has, over the years, systematically and strategically been working to develop our product offering, hardware, software and support services to address more and more applications with the purpose to broaden the addressable market for the company.

We have always viewed ourselves as a metro optical networking player leaving the long-haul market to others to deal with. But we have since some years, started to move into that long-haul market, and we have done it with pretty large steps, now building really high-capacity networks, terabits of bandwidth over thousands of kilometers. It is no longer true to say that we are a pure metro play. This journey will continue. So adding a substantial and fast-growing market on to our list of opportunities is, of course, a great way for us to scale the addressable market. So why can we do that now? And why is it a suitable timing for us to do that now? I would like to point out a few facts. Number one, the way Smartoptics has developed. We have built a product offering that is highly suitable for some of these applications, these longer haul, higher capacity, not for all yet.

But in terms of suitability, one should understand that, of course, you can build the whole Internet and all AI infrastructure using only Smartoptics products. But on the peak and most advanced applications, we would probably not be cost effective today. The journey we have ahead of us is to become a very cost-effective and technically capable alternative also for some of those more advanced applications. We can do that today because if we look at the longer haul market, traditionally, who has been building those type of networks, if we go way back a long time, you would see that there were a handful of selected Tier 1s who were building those type of networks, as an example, AT&T in America. Those are organizations that come with a large set of requirements, a very, very big backpack of legacy equipment that needs to be supported and so on and so forth. That is not true anymore. Of course, the hyperscalers have been building long-haul networks for many years. And we're now seeing new players coming in to support the hyperscalers and to support the build-out of AI infrastructure. So a lot of new network operators, new challengers are building these type of networks. We're seeing neo-scalers building fairly long-haul networks to support their business model, et cetera.

So the market has changed, and we believe strongly that, that market is a market that's highly suitable for a company like Smartoptics, not only our products, but also our role as a challenger in the market and the cost efficiency that we can bring to the table. The other thing that has happened over and above the market changing is, of course, that technology has evolved. So in the past, you have nearly been forced to deal with a high degree of vertical integration to address this market space. And we see now that the merchant technology that we use in our transponders and muxponders are becoming very, very capable and indeed becoming the go-to choice for many organizations, making also our products technically more suitable for going after the larger and more advanced opportunities.

This will not come without an effort from Smartoptics. So we are going to move into an investment phase that we have already started since some time back. So we have some investment areas that are incremental to what we are already doing. So it's not a revolution. It's an evolution of the product offering. And those 3 investment areas are simply to build AI-ready optical networks to deal with interconnected clusters or scale across as we say in our -- in the market lingo that we are using. So basically, when you outgrow one AI data center, you need to build a new one and you need to connect them together. So that's what we're talking about.

In order to do that, we need to improve our products and develop a few new alterations of our products to support longer reach and higher capacity networks. And those products are now on the drawing board, and we have a way forward that we believe in very much. Some of it being, of course, not suitable to share to the open market yet, but it will be announced and released down the line. The third area of investments where we are getting exceptionally good feedback from our customers on the work that we have already done is in the software space, Agentic AI, software and automation, where we've had the luxury not only to have the right team in place to do this, but also to have the right timing to develop new software platforms where we can utilize everything that's available to us through modern software development which is, of course, more difficult to do if you have a huge legacy to deal with while developing your products. As I said, we're getting very good feedback from our customers. We believe that we are ahead of competition broadly. And we believe that some of the ideas that we are bringing to the table are unique and very, very beneficial for our customers.

So stepping into a new era of growth is the ambition. And we will, as we have always done in Smartoptics, plan, execute, measure, change the plan as needed, execute and measure again. systematically invest into our products, systematically invest into scaling our organization to also utilize new technologies to enhance our operations and to become a much more efficient company overall. When we measure ourselves against competition and peers, we can see that already today, Smartoptics is producing a higher revenue per full-time employee than most other organizations. And we want to continue to scale that in order to outperform the market in yet another way. So that's something to study going forward, how we're performing against those metrics.

And that's something that I expect us to talk a little bit more about down the line. And when we are there, lead and really become a top 3 vendor in the target markets in North America and EMEA and increasingly APAC, that is the ambition. So of course, scenario planning is everything, and we've been doing a lot of that in the spring here to give us a solid road map forward, also a financial road map that we believe in that we think that we can execute on. And when we do that, we're seeing a number of scenarios, and we, therefore, provide you with a range in terms of revenue potential, the USD 300 million to USD 400 million being the next target for the company and of course, to achieve a CAGR of over 25% going forward.

We are very committed to profitable growth as we have been over the years. And we're now starting our journey towards EBIT margins above 16%. Having said that, I think it's important to look at the road map that we have ahead of us. I think that the EBIT margin target that we are talking about here, it's something that we're striving against and that we are absolutely targeting, and we're absolutely seeing an upside to those numbers when we do our modeling. But it's something that we want to talk about for the second half of the planning period. My focus and the team's focus is now going to be on revenue and revenue growth and the investments that we need to do to achieve that. So only keeping one eye on the long-term EBIT target for now and coming back to that in a while. So this is it, full throttle ahead. We have a just do it attitude in the company, and we will move forward.

With that, I would like to hand over to Per to look at questions.

Yes. We will start for analysts on the call. First up is Christoffer Wang Bjørnsen from DNB Carnegie.

Congrats on the great quarter. I just want to start out with the issues you mentioned in the first couple of weeks of the quarter where you essentially said that you were for backup purposes shut down when it comes to deliveries. I think does that kind of imply that if you had moved more effectively over to the new site, your revenues would be more into the $30s million. I guess you've said in the past that you shouldn't expect near-term quarters to go towards the $60s million. But given that you kind of -- you are supply constrained rather than demand constrained and you have a decent book-to-bill well above 1 that like the underlying output as an indicator for second half is quarters in the $30s million rather than in the $20s million? Or are there particular component supply issues that makes it difficult to kind of enter into the $30s million in the second half quarters? That's my first question.

Yes. Thank you, Christoffer. So as you know, we are not providing near-term quarterly guidance, and I will, of course, not do that here either. What I can say is that clearly, our growth will not be limited by our own capability in the second half of the year. Production is fully up and running. And as Stefan mentioned, we delivered about half of our revenue in the last month of the quarter. So no problem there. The remaining risk in this market is, of course, the component shortages that we see out there. That is something we've been talking about for a while. It's something that we need to continuously work with and -- we have very, very strong partnerships, and we get very, very good support from our component suppliers today, actually delivering better than expected.

So our hope is, of course, that they will continue to do so, promise one thing and deliver more. We have certainly done our homework doing revenue planning for Q3, Q4, Q1 and Q2 now, scaling our inbound component purchases, et cetera. So yes.

But just then backwards looking, are we correct to understand that like you had 2 weeks of potentially 0 output and that revenues would be in the $30s million if you kind of didn't have those transitional hiccups at the beginning of the quarter?

Well, we're talking theory here. I don't know what it would have been if we had not had those 2 weeks. But clearly, we're delivering half of our revenue in the last month. And of course, the revenue could have been much higher if we had had the -- well, similar performance through the quarter. But it was 3 weeks. And I think a good data point is the fact that we delivered about 11% of our revenue in the first month. So really not a lot.

Okay. Great. And then just moving on to the long-term targets. Can you just like -- you have good visibility on like the market forecast and so on. But can you help us understand a bit like what kind of visibility you have on the, let's say, the '27, the '28, the '29, I guess there's not really a good degree of backlog backing that up, but maybe more visibility on projects you expect or stuff you're already planning to bid on just like beyond the market forecast from Cignal AI, what kind of gives you confidence that there is business out there for you to lift revenues as materially as you're kind of now indicating. That would be helpful.

Absolutely. So the pipeline of projects that we are working with is considerably higher than it has been in the past. Of course, we have a very close dialogue with our customers around projects that are to materialize in 2027 and beyond. We are, of course, guiding our customers to be -- to give us the visibility, as much visibility as they can because that's the only thing that's jointly going to help us through any upcoming supply problems that we can see. We're seeing some of the larger competitors we have in the market now guiding that they are -- they have basically filled their order books for the year and beyond, which means that choosing Smartoptics because we are the nimble player in the market who can deliver quickly is going to continue for a considerable time.

And last but not least, of course, the traction we have in our large account strategy and of course, the amazing opportunities that we have ahead of us in relation to that is also giving us a lot of confidence. It's a journey. You need to get through all of the steps that you need to get through. But in general, I would say that what you have seen of the large account strategy so far that has been driving our growth, the opportunities we are working on now are bigger rather than anything else. So yes. So we have data points that give us confidence.

All right. And then just finally, more on the investment side. You mentioned more focus on revenues than earnings near term, which is I think it's great. But just I think you added a lot of people during the quarter, now at 160 FTEs, which is a record number of adds both sequentially and year-over-year as far as we can tell. Is this kind of a new ramp, which puts you at the number of people that you like -- you targeted for the year? Or will this new pace of hiring continue in the next couple of quarters? And then as an add-on to that, like 13 new people quarter-over-quarter, like what areas are you primarily hiring in right now? Just to get the sense of your pace of investment going forward...

So the 160 is a little bit inflated. As you know, we moved production and those are still counted as FTEs. So we have 10-ish people that will be removed in the second half. So it's not that dramatic.

We have 5 minutes left before we need to close this call to get on to the next one.

I suggest we go to the next analyst, which is Markus Heiberg from SEB.

So the first one from me is on the new addressable market here moving from $5 billion to $6 billion market to $11 billion to $12 billion roughly. So how much of your revenues are currently in these new segments? And how do you see that portion of revenues for Smartoptics moving over the coming quarters and years?

I can say that it will increase. We are not measuring that. We do not really have that visibility in our ERP systems. So unfortunately, I don't have the data. It's gradually growing and it's bigger and longer distance all the time, so growing for sure. And we are still reporting all of our numbers into the metro regional segment.

Yes. So it's fair to assume that you have meaningful revenues in those new segments already?

Yes.

That's good. And then last one for me to get through the queue here. So on the gross margin and maybe in relation to EBIT margin and phasing over the coming quarters, it sounded like it was a one-off to some extent or one large account explaining the lower gross margin this quarter, but that could happen, I guess, also in the future. So how should we think about the coming quarters in relation to gross margin and also the phasing towards your EBIT margin target?

So I think on the gross margin, 2025 is a pretty good reference going forward and -- which is just below 48%. We -- you are absolutely right that from time to time, we may choose to be a little bit more aggressive on a particular deal or account that can happen in the future, too. And I think the second part, the phasing to EBITDA was -- do we have an answer on that? Not really, no.

The second...

Part of your question, can you repeat, Markus, please?

More about the -- because if you look at consensus, it is already sort of in 2027, you will be about more than 16%, which is your target. Do you think that's reasonable that you will be there already at more than 16% EBIT margin in '27? Or will it be more back-end loaded towards the end of your forecast period?

I think it's all going to depend on the revenue growth, so -- which is, of course, the biggest contributor here. We will see, as I mentioned, only one eye on that target in the near term and the remaining 3 eyes we have will be on the investments that we need to do and the revenue growth and yes, to go after the bigger target.

Okay. Up next, Øystein Lodgaard from ABG.

Congrats on the blowout quarter. A couple of questions to start off. First, if you can give some more flavor on this new breakthrough customer that you mentioned. And secondly, with these new targets, you're not kind of specifying a time frame, you're just saying long term and second half of the period. Can you be more specific on when do you expect to reach $300 million to $400 million in revenue?

Yes. So the new customer, I cannot give that much more flavor. It's a large U.S. Tier 2. So it's a very, very good potential customer for a very long time at higher levels. So that's great. When it comes to the timing of the target, you can see that we're also guiding for or rather, we're putting an aspiration on what we expect in terms of growth. We have, of course, been working with several scenarios here. If you use our aspiration of 25%, you will end up in 2031. If we grow a little bit faster than that, it may happen a bit earlier, of course. Yes. So I think that's kind of the time frames we're talking about.

Perfect. And the second half -- you say EBIT margin above 16% in the second half of the period, does that then mean like 2029, 2030 or...

Yes.

And also, you're saying you see a potential for higher margin longer term. Can you say something about what you think the margin potential of the business is? Or is that something you don't want to comment at this point?

No, we'll save that for later.

Good. And we have a couple of questions on the portal. We have some more time actually. I just got notified so, [indiscernible] squeeze...

Okay. Good. Thank you.

From Jorgen Weidmann: Could you please specify what you mean by midterm? Is this still the '26 to '30 period you have planned for before?

Yes.

Good. From Bent Mikael Haugan: How do you see the need for equity increase and other financing to fund your strong growth?

So that's obviously something that we have been working with together with our banks. We have -- or we're in the final moment of extending our credit facility to secure cash. And that's the activity for now. No other major events planned or anything.

Good. Then we have one more from Jorgen Weidmann: When you increased the EBIT margin target so significantly, so quickly, can you please provide some color on what changed and how we should think about this?

So to begin with, I don't think we have changed it that quickly. We have earlier been talking about 13% to 16%. So it's not miles apart from the new target. I would just like to point out that obviously, focusing a little bit more on the upper range of the old guidance and also for us to look at potential beyond that is more interesting as we conduct the business and as we run the company. So I would say -- and I mean, if we are to talk about changes affecting the capability to produce EBIT and EBITDA, I would like to point out what the future holds for us in terms of more efficient operation through utilizing automation, robotics, AI and so on and so forth. That is the material thing for the future.

Perfect. So that was the last question on the portal. So if there's no other things, I think we're done.

Yes. Then thank you very much. Enjoy the rest of the summer. We certainly will. And thank you again for taking some time out of your day to listen to us today. Bye-bye.

Good morning, and welcome to Hotel Continental and good morning also to you online. It's a fantastic and Sandy day in Oslo, and it is a fantastic day for Smartoptics and a great quarter that we are going to talk about today. I want to start by just a few thoughts to my staff and my team. Thank you very much to operations for always being there supporting us through the quarter and also supporting us through the relocation of production in Q2. I'm going to address all of our staff that much like me, have their life contributing to the optical networking industry. Very few people get to contribute to technical innovation that changes humanity forever once.

We are starting our second time around now. That's a luxury. To the new people who have joined Smartoptics, warm welcome you have a beautiful future ahead in this industry. Stepping to the quarter, obviously, super strong momentum and really, really good progress overall and in some of our strategic areas that we've been talking about for a couple of years now. I want to start this conversation around the market that we are in. And I think today versus about a year ago or 2 years ago, there is no doubt the market projections for our market for the coming 5-year period and beyond look much, much more attractive than they did previously. It seems like consensus is somewhere high single digit to low double-digit growth over the coming 5 years of the industry. So in particular, Signal AI, which is the analyst firm that we have been using for reference is projecting $16.5 billion in 2025 to grow to $24.7 billion in 2030. It's not difficult to find higher estimates than this. And some people will say this is only a 10% growth, what's all the fast I would like to remind you that Smartoptics game has always been to take market share. We are the challenger of challengers. We are growing faster than anyone else -- and we are developing our products to have a larger and larger addressable market. The fact that we have in 2030, another $9 billion to fight for it's fantastic for us. That means we can target our technical innovation, we can target our customer activities towards that market and really grow this company for a very, very long time. So great news.

You will also notice, those of you who have followed us for some time that we are no longer talking about a subset of the market. There are subsets in this market that is growing faster and faster. But with the innovation that we have done in our product portfolio over the past years, I think it's more relevant to look at the whole market. We are not a pure-play long-haul player as an example, but we are certainly there in the gray zone competing for long-haul kind of applications development that has happened in the past year or so. That gray zone is huge for us, and it's an important market for us, and it will be an even more important market as we move forward. So a great market around us a broad and high traction in everything strategic that we have been talking about for several quarters. We normally don't report order booking, as you know, for many, many reasons. But from time to time, we talk about our order booking to illustrate a phenomena or to give you a sense of the traction that we are feeling on a day-to-day basis, and I will do the same today.

What I want to say is, first and foremost, a great traction through the quarter. great order booking through the quarter. Our book-to-bill is considerably higher than 1 and very stable. If we look at the United States of America, to illustrate the width of our market, we have orders from about 100 accounts. By far, the largest 1 is a U.S. Tier 2 operating across the United States. It's an unannounced customer. So it's not someone that we've talked about. They represent a little bit about 15% of our order booking in the quarter.

Two runner ups sort of $1 million to $1.5 million accounts in the quarter are regional Tier 2s, also from the CSP segment. So clearly -- and we have several accounts like that. As an example, in 2025, our largest customer was a very similar Tier 2 regional operator operating in a number of states then they are not among the 3 that I'm talking about here, this particular quarter. So great success in what we have referred to as our large account strategy over the years. But that's not it. We have a California-based ISP sort of million dollar account in the quarter. We have financial verticals, so trading, algorithmic trading and such, around about $1 million -- and we have our first individual Neoscaler placing orders in the same range, million-dollar orders. So great progress also in this emerging segment of neoscalers where we have a handful or more customers today.

EMEA looks similar from 1 perspective, but still a little bit behind the U.S. We have orders from about 125 accounts, 1 million-dollar plus bookers in the quarter include, for instance, government in Nordics, Tier 2 business-to-business operators, so typically data center to data center in the U.K. And we have an algorithmic trading company placing orders north of $1 million in the quarter, operating on a global scale, so great potential in those type of accounts, too.

Asia, from an order booking standpoint, good news, we have opened up 1 new market in the quarter. We have a between $500,000 and $1 million PO from the Philippines, which is a market where we have not done business before. So our bisdev activities in Asia are scaling. And you will see also when I talk about revenue that there is some good news also in the revenue. So great position. I will leave the numbers. I will let the numbers speak for themselves here. And now Stefan will come back in great detail. We have a lot of new shareholders, that have joined and invested in the company over the past months and year. So I want to, as we normally do, take a step back and talk a little bit about the drivers in our market.

What one should remember is that the megatrend that we are leaning on is something that we have referred to as the ever-growing demand for bandwidth. It's always been there, drivers come and go, drivers accelerate all of the forces that we have talked about over the years are still there. the need for modernization of global transport infrastructure, particularly in the metropolitan and regional area networks to support higher bandwidths. The cloud applications, the mobile, the streaming, all of that is still there. And now the ever-growing demand for bandwidth has a new best buddy called AI. So AI is the second mega trend that I talked about that will change any forever, and we are very much part of contributing to that development. If there are people who still doubt AI and the existence of AI and whether or not that's going to affect us all and how we do everything in the future. My recommendation is think again. So it's nearly impossible to talk about our customer segments without talking about AI. So I will take that stance today.

So we have 3 customer segments, cloud and AI, network operators and enterprise. And I think what's happening now and what will happen in the coming decade is going to be very, very relevant for all customer segments. So cloud and AI. Those are the cloud service providers, the ICPs, Internet content providers. We package also all of the content delivery networks and such into that, and obviously, the neoscalers. So what's going on in the world is that data centers are being built at the pace that we have never seen before. A lot of those data centers are loaded up with GPU technology. and it's at massive scale. So the GPUs are instrumental machines when all of you, the public are using AI all of the compute is happening all models are running in these GPU-enabled servers. And there are hundreds and thousands of those per data center and there are many, many, many data centers and it's still growing. So in order to build 1 of these data centers, as I said in Q4, you need power. Number one, you need cooling. Number two, so water, cold climate or whatever or space for that matter or submerged or whatever, really. And you need connectivity, so connectivity is what we do. Fibers in the ground, we light them up and we see massive amounts of data over those fibers to connect those data centers to for the lack of a better term, the Internet to reach the users and also in a growing fashion to connect those data centers together to allow for the emerging machine to main communication between these GPU clusters, which is going to be huge. So owning data center and owning 1 of these GPU parts or whatever it might be, you always have the option to buy network products and software and services from Smartoptics and build your own network. That is happening. You also have an option to base your equipment in a multi-tenant data center owned by someone else who then may by the network connectivity from Smartoptics and connected data center to the world. You may also use either of the 2 models that I just referred to and call a network operator, a CSP, very much like the customers that I talked about being our lead order bookers in Q1 and ask them to supply you with bandwidth to connect your data centers. And this is happening in in the whole world for us. So as many of you know, we have no direct engagements with the hyperscalers of the world, but we have a lot of indirect hyperscaler related business, sometimes named accounts. As an example, this operator needs to build this network for whoever it might be, say, Meta as an example. And we have a lot of general demand from our operator customers who are selling a lot of capacity to hyperscalers. But hyperscalers are not alone. It's neoscalers and a lot of other organizations who are building that sort of infrastructure. So high growth for us in the network operator segment, also driven by the same development.

Enterprise is an interesting 1 because I believe that's going to be a very, very important market for us in a few years. We're seeing that happening. We're seeing the enterprises realizing that the token cost for running every AI demand that you have is going to be a significant part of your overall cost in the company. Hence, you will start to invest in your own AI infrastructure and GPU technology to run your models, to run your workloads natively or in the data center somewhere. So I think that -- and this is not for all AI workloads, but it's for some. So I think the enterprise community will build this type of infrastructure for a very long time. We, Smartoptics, we have already started to build our own infrastructure to run our AI models that our customers will connect to and run our models when they buy our software products that are AI enabled in the future. So a great market also there. So a fantastic market and Smartoptics is here to service that, and we are here to stay and we're here to continue to develop our products to become more and more and more relevant.

I want to dig in a little bit more into the quarter and look at the numbers. We start, as usual, by looking at the different geographies in 2025, it's been an obvious pattern that the U.S., in particular, and the Americas region overall, which is, in our case, 95% U.S. or something like that. It's way ahead, great traction. We're winning a lot of new accounts and there is just growth everywhere and opportunity everywhere we look. And the development between Q4 and Q1 is a very unusual development. The normal seasonality in our market is that Q1 is the weakest quarter, we're actually sequentially growing Americas to an all-time high in Q1. that is a proof point of the market around us and our performance in that market our attractiveness for our customers. I also talked last year a lot about EMEA and how I think EMEA will catch up. That was based on the reality that EMEA in 2025 looked a lot like the U.S. in 2023, meaning large accounts, a lot of business development towards larger customers projects that we can name, identify and design for future wins. And EMEA has gone through the first phases of that now. We have won a lot of new customers in the area. In Q1, the drivers in EMEA, the engine in EMEA is built largely on the Nordics and U.K., Ireland. The other regions are performing absolutely okay, but the growth for right now seems to be the strongest in Nordics and the U.K. But a fantastic quarter for Team EMEA. APAC is still very small. It is a bisdev market for us. what we see in Q1 is that our large and established market, Australia is fairly weak in the quarter. So the $1.2 million doesn't include a lot of Australia. Hence, for the other geographies, it's an okay quarter. There are not that many larger projects in the quarter. There is 1 sort of $300,000, $400,000 project, and that's in South Korea. So that's a second example of how we're opening up a new market. South Korea is -- has also been more or less virgin territory for us in the past.

So overall, good progress with our business development activities in APAC. It is still Japan. It is still the cluster of countries from from Singapore down through Malaysia and Indonesia. It is still Australia and New Zealand and now we're adding the Philippines and South Korea to the mix. So -- and we have opportunities in all those geographies that are significant for the future.

Looking at products and growth and revenue. We can clearly see that the -- well, same as always, where we invest money, we get the good growth and returns. So Smartoptics has been on a journey for the past 7, 8 years. to invest in our solutions, software and service businesses. Those are very tightly connected to each other. When we sell solutions, we sell software and services. And occasionally, we sell software and services when we don't sell solutions, but that's something we still have in the future to develop our products to become more multi-vendor, to be a pure software play in certain applications and certain areas. But today, they are largely connected with each other.

And we can see the same phenomena as we saw in the U.S. that we have sequentially growth Q4 to Q1, which is great. And in my fairly long career in the industry, actually unheard of, again, demonstrating Smartoptics attractiveness in a fantastic market. We're also growing business area devices, and that's important because that has been now for more than a year. It's more like 1.5 years now when we have put a little bit more focus on that have put in a new leadership have done great changes, have invested in our software platforms to better support that business, and I'm very pleased to see growth in that segment. So it's following the market. It is time to talk about details of the numbers, and I will invite Stefan to do that. Welcome, Stefan.

Thank you. Magnus. So the revenue was a very strong quarter. We have an increase of 59.6% to 22.9%. And that, as Magnus said, was mainly driven by high growth in Americas and EMEA, mainly within Business Area Solutions. The gross margin in Q1 was 48.2% compared to 47.3% last year. and in line with the full year gross margin for '25 or 47.8%. The underlying margins are still or consistent quarter-over-quarter, and we believe that the full year 2025 gross margin still serves as a good guide going forward. The EBITDA is -- was 2.7 million compared to 1.2 million last year. with an increase of 1.5 million. And that is split up in the revenue made an increase of 4.2 million and the employee benefit expenses increased with USD 2.2 million from USD 67 million from [ 45 ] with 48%. And -- and that is -- can be broken down into some components where we see 11% is related to nonrecurring costs related to the consolidation of production. -- and that's around SEK 0.5 million. We have 10%. That is an FX component. We have 70% of our costs in NOK and SEK, and we have 20% in U.S. dollars. 1% of the growth is related to organizational growth, where full-time equivalents grew from 129 to 147 persons. And that includes new hires of sales in the U.S. that with the mix with more people in U.S., the average cost per employee goes up. Remaining 13% is related to inflation, annual salary increase and variable compensation related to the positive development in sales. Other operating expenses increased from USD 1.1 billion to USD 1.7 billion and was -- and that component is Half of it is based on employees and half of it is related to the development in sales. The EBITDA margin increased to 11.7% compared to 8.4% last year. And excluding the nonrecurring cost, the EBITDA for Q1 was 13.7%. The EBIT margin was 7.9% compared to SEK 4.1 million last year. and excluding the same nonrecurring costs, the EBIT margin would have been 9.9%. Cash flow from operations in the quarter was good, SEK 2.2 million compared to SEK 2.6 billion last year, and we have a stable working capital. Looking on our balance sheet, we have an equity ratio of 56% compared to 58% last year, and the decline is a result from a growing balance sheet. Nonrecurring assets amounts to EUR 9.1 billion, up from 8.6% last year. Current assets is NOK 39.3 million, up from EUR 34.4 million and is related to mainly inventory and trade receivables. Cash SEK 8.4 million compared to SEK 9.9 million last year. We have available credit facilities of $7.7 million equivalent to NOK 75 million. We have a high focus on cash. We continue to manage trade receivables, but we expect inventory to increase and that will then result in an increased working capital. Nonrecurring liabilities, a small item, USD 0.2 million and current liabilities excluding deferred revenue, amounts to $11.4 million, up -- down from $11.6 million last year. Deferred revenue is still growing and is now USD 13.6 million, up from USD 10.2 million last year. The working capital amounts to USD 14.6 million compared to USD 136 million last year and is up 100,000 from last quarter, and there is no major changes. Inventory is amounting to USD 18.4 million compared to 49 million last year. And the increase is related to longer lead times in components -- we see also that, as I said, higher levels of inventory are essential to secure the future growth in sales. And we see a very low risk in our inventory. Trade receivables amounted to $19.1 million compared to USD 84 million last year. We have had normal collections in Q1 and -- we have a higher share of sales later in the quarter compared to last quarter. We see no risk in our trade receivables. Trade payables has decreased to 5.7 compared to 6.9 last year and are on par with last quarter. Our payment terms is mainly 60 days, but we have some suppliers that force us into 30 days. Net other short-term liabilities increased to USD 17.2 million. and that is mainly related to deferred revenue, as I mentioned, and also we have net tax liabilities of a little bit more than USD 1 billion. The Board has proposed a dividend of NOK 0.6 per share. And the company is facing -- emphasizing an increasing or stable dividend. We see a stable and positive financial development with a solid financial position and the strong cash flow. The dividend is still pending AGM approval later today. Thank you all, and back to you, Magnus.

Thank you, Stefan. I want to talk a little bit about the long-term targets. This slide is the same 1 and these targets are the same ones that we've been using since mid-last year. So the company at the moment, me and my team are in the middle of our yearly strategic review process. We are also in a market that has changed dramatically. The outlook for the coming several years is absolutely phenomenal. And we are, of course adjusting to that. In Q2, we will release new targets. And I would like to say that there are a number of things that you should expect, and there are a number of things that you should not expect. There is nothing wrong with the targets that you see in front of you now. They are strong, solid for us in the company and for people deeply involved in our industry, they are understandable. But I don't think they are good enough for a broader audience. We have to clarify what do we mean and what are we really striving for in the coming 5 years. You should also expect more KPIs from Smartoptics where you can track our progress. in greater detail and that we can really lean on when taking our investment decisions going forward, so an overall improvement of -- in that area, but not significantly different.

What you should also expect is continued investments. We have a fantastic opportunity ahead of us. And as I've said for several quarters, not investing in the company's future at this point would be full out foolish. So that's the path we're going, and that's the future we have ahead of us. With that, we are done with the presentation part of today. And I would like to hand over to Per, our moderator. If there are any questions.

Do we have any questions in the room? Okay. Then we go to teams. We have our analysts on the call. I see Christopher on 1 wants to start is from DNB. Could you please unmute yourself and ask your question.

Yes. Can you hear me?

Yes.

Yes.

Amazing -- so for taking a on the strong momentum in the quarter. It's all exciting. Just wanted to kind of -- if you could give us some kind of nonquantified preview on the need to kind of change a bit the targets in conjunction with Q2. Is it reflecting like something like negative? Or is it more that you're seeing that you're kind of currently tracking well ahead of the trajectory that you set out and you need to kind of talk about higher growth now and then return to below trend in some year for route just like -- it creates a lot of uncertainty when you say that there will be a change in outlook when we get to next quarter. So just any any directional hints would be much appreciated, I guess.

So directional hints on the strategy. Is that what you're asking for and the new targets that we intend to release.

Yes, directionally, like is it -- do you think it will be a positive thing or yes, because it's a bit spooky when you say that we are maintaining our guidance for the long term, but we will kind of change it next quarter?

If I may stop you right there. We didn't say that we will change it. We said -- I said -- I hope I said that we will improve it. We will improve it in a couple of ways. We will improve yes, make it more simple to understand. Obviously, we are setting tougher targets on ourselves. We are continuing to invest probably at a higher pace than we have the market ahead of us is fantastic. We need to capture that opportunity. So I would say for you, for me, Christopher, it's going to be a very positive development. It's going to trigger us enormously within the company, and I hope it's going to create some excitement in other stakeholders.

All right. That's helpful. And then as my follow-up, -- can you give an update on the lead times you see from competitors and how they've evolved since last quarter? And and that's on the demand sedan then also how your kind of transition into new facilities has fared and how you're supplying capacity looks in the quarters ahead, if you're able to deliver on the massive opportunity that is currently out there.

Right. So I mean, obviously, to get detailed information, you should probably talk to our competitors because I'm hearing information kind of indirectly from our customers mainly. And the several new customers that Smart Optics has onboarded for the past 2, 3 quarters as a result of larger competitors not delivering products to them. I mean the overall trend seems to be the largest players in our market are doing everything they can to satisfy the demands of the largest customers in our market, meaning hyperscalers a very demanding group of customers with huge growth and huge needs that is kind of opening up the good old gap that we have been talking about for so many years, the lack of midsized vendors to address the midsized market I mean that GAAP argument is more relevant than ever. We are, as I said, onboarding many, many new accounts as a result of this. The good thing is that they are not they are not changing their overall procedures when they do that. They do it at an accelerated pace, but it is still important when you bring in a new critical vendor of this type of technology and software into your backbone that's a procedure that has to be thought through. You have to change your operational procedures to fit the new player, Smartoptics in this case. You have to educate people, you have to do a lot of things. So it's not like this is happening overnight, but I would say what took us 1 to 3 years to achieve a few years ago may take 2 to 3 to 4 quarters now. So the processes are way faster. When it comes to Smartoptics delivery times, we're still good our inbounds on components is still working nicely. But you also have to be aware that we are currently in the process of planning component deliveries for Q1 and Q2 next year. So we have to take risk, and we have to do the right things. Now this is not a trivial exercise by any means. So far, we have it pretty much right. And I'm hoping that we will continue to have it much like that for the rest of the foreseeable future, but there is a little bit of risk in those exercises. When it comes to our own capability, well, I kind of hinted to that in the beginning here that our book-to-bill is considerably higher than 1. So where we limited to our capabilities in Q1. I mean the answer is given by the previous statement. We could have delivered more if we had, as an example, a double-sized production facility or triple size production facility, which we will have going forward. Q1 is also a quarter, as you know, with a lot of holidays, closing all the book, doing all of the stock taking keeping the order. So it's a shorter than an average quarter from an operational standpoint. In Q2, we have a massive project for Smartoptics in the first 3 weeks of the quarter, where we are consolidating all of our production into a new facility. So Q2 for us will be very much a catch-up game now. The teams are working over time and have been working over time for a very long time, including Saturdays and Sundays and so on and -- we're doing all the tricks that we are aware of to increase capacity, including bringing on temporary staff taking external help and so on and so forth. So knock on wood, the catch-up will go great. And yes, so -- thank you. I'll jump on the bus on the queue. Thank you.

Perfect. Up next is Øystein Lodgaard from ABG. Please unmute yourself and ask your question.

So first of all, just on the quarter, is this -- are there any kind of one-off large projects or anything? Or is this more kind of many smaller deals? I'm thinking here about how we should kind of extrapolate the strong Q1 growth? Is this kind of should we now assume kind of normal seasonality here for the next of the year? Or were there any kind of 1 of large contracts that boosted Q1 growth?

Nothing significant to talk about. I mean, obviously, we are in a different situation now is then compared to a year ago. We have a lot of larger accounts that we did not have on and in particular, 2 years ago. So the -- obviously, the overall project size when our customers expand their networks in certain regions or areas of the network, et cetera, they are, in general, bigger. There is no doubt. But that's not going to change in Q2, Q3 and Q4. If it does change, it's going to change upwards. So yes, so normal seasonality, taking into account what I said about 2 minutes ago, it's probably good, as always, a pretty decent way to think about this. Yes.

And regarding what you said 2 minutes ago about the big move in Q2. Do you think that will have a major impact? Or is that something that you -- that will kind of lower revenues all else equal? Or do you think you should be able to catch up during the quarter?

So There are things that I know and things that I hope and things that I think here. And I know that the first 3 weeks in the quarter were dramatically lower in revenue than they would have been without the move. That's a no-brainer. That's obvious. I think we will have a great catch-up game, and I hope that we will have a great catch-up game -- but the market is not slowing down. We haven't seen any signs of that. So I would assume that when we talk about Q2 in the summertime, we will reiterate that if we had, had a production facility twice the size that we have now, we could have done more. I think that's a fair assumption for now.

Interesting. And you stated earlier that the market outlook for the coming years is I think you said absolutely phenomenal, and we have to adjust to this. Could you just give some flavor on what does that mean? What -- if you have to adjust does that mean investing more now upfront to capture that opportunity? Does it mean going more broader? Does it mean going even more focused towards larger customers? Can you say what you mean by that?

So I mean, the details of this, we are in the middle of it. I'm the CEO of the company. Of course, my influence on this is huge. So my feeling is I pretty much know where this is going to land, but I want to save some thunder. This is a process. We need to get people on board. We need to get the Board on board with our strategy. We need to do a lot of things when we do this. But I think all of the things that you said there are relevant are relevant, broadening the scope in terms of what softwares are we going to deliver to the market? What hardware capabilities are our products going to have? Which verticals are we going to address? Are we going to go after larger and larger accounts. I would say, yes, that's a given. Are we going to invest more. Yes, that's also again, but to what degree is the interesting question here and how to manage that in a responsible way an aggressive enough, I would say. So a lot of forces in play here.

last question from me. Devices, once again, very strong results from devices. How much of that is the market just being very, very strong? And how much do you think is driven by the strategic measures that you have implemented in the Devices business. Just trying to figure out how sustainable that is and if that is kind of a new trajectory going forward?

So I wish I knew Øystein, that's a very, very difficult question to answer. It's again here things that I know and things that I think -- so what I do know is that we have done tremendous progress in terms of our tools to deliver products to customers quicker and at higher quality -- those are our software tools. That's where the innovation in this product area is happening in Smartoptics. We've done great progress. Are we done with that? No, we're not done. We're going to continue down that journey. I think -- sorry, I know that, that has had a positive effect on that business. And what I think is that the overall market is, of course, contributing to this growth to some extent, it's impossible to give you any more qualified numbers on that.

Good. Up next is Markus Heiberg from SEB. Please ask your question, Marcus.

So a couple from me as well. The first 1 is on the addressable market that you're talking about the SEK 16.5 billion in 2025. I would assume that less than half of this is addressable to you or I might be wrong, but you talk about the whole market growth being addressable. So how should we think about that market number?

So the way I think about this, and this is the big change. And we sort of started to talk about that change about a year ago, maybe 2 years ago even. If you take Smartoptics full product portfolio and you say that all of the world is going to be built with Smart optics. Can it be done? Yes or no. The answer is yes. Will it be the most effective and efficient solution for all of those applications? The answer is probably no. We are continuing to invest in performance, capabilities, speeds, feeds and so on and so forth. It's a very multidimensional game. We're playing there into our products. They are becoming more and more capable. They are becoming more and more comparable to the more advanced products in the market -- and we are also riding some other waves like -- I mean, the advancements in pluggable optical technology that we are using in the lion's share of our product is also helping us tremendously here. So I think if we were talking about $5 billion, $6 billion being exclusively the metropolitan area networks 2 years ago, we are definitely an attractive player in the very large gray zone between metro and the most advanced applications. We have customers running terabits of traffic over 1,500, 2,000 kilometers today. That is absolutely very, very long distance communication and that is very, very high capacity transport. That's the gray zone I'm talking about. And that, I believe, is a huge market. We're also adapting our products for 2027 and to do even more on that. So this is going to be a continuous opening up of that long-haul market, but not to the extreme.

That's very interesting.

And very interesting. I agree.

And then to my second 1 here is on the cost and investments going forward. The costs were a bit higher. Of course, you have some FX headwinds and some relocation issue, but it also looks like underlying costs are up quite a lot. So -- how should we think about that over the coming quarters? Is the Q1 cost base a reasonable level to look at and you will invest from that? Or are there any things that we should adjust for.

Do you want to come up and answer.

I think that's Yes. I can see if we look on the employee benefit expenses that increased 48%, 21% was nonrecurring and FX driven. So -- the remaining increase of 25 percentage points approximately. I think it's reasonable that that's going to be a stable position for our expenses. -- stable increase and good guidance going forward. So -- but of course, in general, we will see that our expenses is going at a slower pace than our revenue. I mean that's the underlying plan to enable to facilitate the increase in EBITDA.

And a short follow-up on costs to take the gross margin question here also. It recovered very nicely from Q4. Anything in particular that we should be aware of going forward on the gross margin side?

No, I think the answer is no, there is nothing in particular that you should be aware of at this point. And what we said in Q4 is that the Q4 was a little bit abnormal in some senses and that the full year 2025 was better guidance. And I think it's that's where we are. And I think it's going to be relevant also. Thank you.

Good. Then I see that Christopher has an additional question he wants to ask.

Yes. I just want to ask on fiber channel. It seems like there is some talk in the market about Broadcom taking of new generation. Can you maybe talk about how you're positioned for that? And from your experience, how kind of kind of the refresh of customers' setups have impacted you in the past and how to think about this going forward?

Sure. Absolutely. Yes. So -- so fiber channel is a subset of our enterprise market. So if you look into our Q4 reports over the years, you see that we have been reporting the different market segments. Fiber Channel is -- we've never really done the estimate. But if I were to sort of give a qualified yes, I would say that half our enterprise market or so is related to those type of applications. So we do not dictate the pace in the fiber channel market, that's dictated by companies investing in their storage environments. That, in turn, is dictated by when new generations of fiber channel technology are released and new generation of, of course, risk systems and so on and so forth. So -- so it's typically every second year or so, we get a new generation of fiber channel coming out, and we see a boost that lasts for for 18 months or so, and then it cools off a little bit before the next generation comes out, and we see a new boost and it goes on and on like that. I would say, overall, there are very few people who talk about fiber channel being a growing market. I mean, that can change. It is a rock-solid technology for storage area networks. And of course, storage will always be a very, very relevant piece of the overall IT infrastructure cluster. So 1 should never say never. At the moment, so Brocade or Broadcom, who are the largest supplier of the switches. -- that we also have a unique collaboration with in the sense that our optics is the only optics that's approved to sit in the fiber channel switches and directors -- they are now in -- on releasing Gen 8. I believe they are releasing it this summer. Is that correct, yes? And that means the big storage OEMs, I mean, the IBM, Fujitsu, Dell Corporation and so on of the world. They will start qualifying Brocade Gen technology this summer. They will be done by that sometime late fall and customers are going to start buying Gen8 enabled storage area network and storage clusters. -- from sometime next year. We are releasing our response to GEN 8 this summer. It's a 64 gigabit DWDM DWDM technology we're talking about that goes together with basically all our other products, line systems and so on and so forth and become part of this solution. It's going to go through the same qualification processes, as I just talked about. And we can expect that to have a pickup in 2027.

That was all from the call. We have a few questions on the portal as well. Oscar, first here, he has 2 questions. One, risk for a shortage of components, et cetera. The second 1 is given the growth target is 13% to 16% EBIT margin conservative given underlying scalability.

So I think 2 things there. On the first one, is there a risk of component shortage? I wouldn't characterize this as a risk. It's a fact. I mean the component industry is absolutely running at full pace. There is no doubt. And I mean these are components sitting inside the components of our components. -- that's where you see the shortages. So things like laser ships, for pump lasers that we use in EDFAs, urban do fiber amplifiers that we use to extend reach in our product is 1 good example. So it's a fact we are managing it. We're working now on securing our future, and we have been doing that for 2 years. So yes, so it's here.

The second 1 was related to profitability and scalability of the business model. And I think this is precisely what I talked about in the conversation around what is our new strategy going to look like. And I would like to push that question into the future and come back in Q2 with a better guidance on what we are really aiming for with this fantastic company.

Nice. Then we have TrigBrunlang. In addition to a potential revenue loss, what is the level of extra cost that the moving process in Q2 will incur USD 1 million is the question more or less or more.

The cost of consolidation of production. So that's already in Stefan's number, the USD 47 million includes all of the extraordinary things that we have done, and it includes everything up to and including July, August and then we're done.

So good. That was the last question on the portal.

And I think if I may clarify, it's not lost revenue. It's going to be if at all, it's going to be slightly delayed revenue. because we are still better than most other people in the market, then thank you very much. Have a great day, and see you in about a quarter. Thanks. Bye.

Good morning, and welcome to Oslo and Hotel Continental, a fairly calm Oslo, clearly affected by winter break and the fact that Norwegians ski this week. Welcome to you in the room who are not skiing and also welcome to all of you online.

We are here to present Q4 of 2025, Smartoptics and also, of course, full year 2025. We will start as we always do and talk a little bit about the highlights of the quarter. Like last quarter, I will let the numbers speak a little bit for themselves. Stefan will come back and talk in great detail about everything that you see on the left of this slide. I will just conclude that it's a fantastic quarter and a fantastic year for Smartoptics. It's an all-time high revenue quarter. We're seeing demand stable to accelerating, I would say, accelerating towards the second half of the quarter and continuing.

We're seeing increased traction with our large accounts, independent of customer type, network operators, neo-scalers, cloud providers and so on and so forth. We have an absolutely fantastic market in the U.S. And interestingly enough, we have a Europe that looks very promising and looks very interesting for the coming years, and I will come back and explain that.

Last but not least, from a product standpoint, we're growing in all our product areas, and I'm very happy to report that it's a record quarter with super good growth in our business area, optical devices, which is a business area where we changed the leadership, where we started to invest about a year ago. And we're seeing like Smartoptics in the past, where we spend our money, where we invest, we also get growth and good business. So it is working. We are continuing to invest in the company.

I said in Q3 that not investing in at this point with this great market ahead of us would be foolish, and I will just reiterate that. We are going to continue to invest. And the question right now is what do we mean by disciplined investments? Well, we do mean that we're going to invest or rather grow our OpEx slower than we grow our revenue. And we are going to grow with profit. But the most relevant question now is, is this a good time to hit the accelerator to capture the market opportunity that's coming from AI-driven capacity extensions over probably the coming decade.

And we will, of course, work hard on that over this year, but it's no doubt investments are continuing. Q4, yet another quarter where we are proving that we are the challenger of challengers in our market space with one exception in the numbers that has been reported so far to the industry analysts with one exception, which is purely related to hyperscale build-out, we are growing far faster than anyone else. So we are the challenger of challengers.

I want to talk a little bit about what's happening in the market and explain a little bit where we are doing well. And of course, it's nearly impossible not to talk about AI at this moment. And I'm going to do that from a standpoint of our 3 customer segments: Enterprises, Network Operators and Cloud AI, what we also sometimes call ICP, Internet Content Providers. So what is happening in the market? And the reason why I want to talk about it from all these 3 standpoints is that all of them are equally relevant from the standpoint of AI.

What's happening in the world is that data centers are being built at a pace that we have never seen before. When you're building data centers, you need one thing more than anything else, and that's cheap electricity or low-cost power. That's available in certain spaces and places on the planet. And if you find it, you will build a data center and you will load that data center up with GPU technology, et cetera.

The other thing you need secondarily is to cool that equipment and you need access to water. Having network connectivity to these places because obviously, if you build a data center, much like cloud in the past, you need to connect these data centers to the Internet, to the pairing points and to other places in the network. That's easier to solve. You just buy bandwidth, build networks and the problem is solved. And that is what our customers are doing.

So these data centers, they can appear in many different locations. We've heard about building in cooler geographies to achieve natural cooling. I recently attended a big conference where a lot of data center companies were present. What else are they talking about? Well, they are talking about building data centers nearly everywhere. So submerged data centers under the sea. We're talking about data centers on decommissioned oil rigs because you have access to wind power and you have space and you have water.

We're talking about -- I was in Tokyo last week in Japan, they are building dedicated platforms in the Tokyo Bay where they will place data centers. And really, any idea is as good as the other ones. So that's clearly one element. Our customers are building new data centers. They need to connect these with multiple terabits. The biggest projects that we have been looking at is day 1 requirements of hundreds of terabits connecting that to the Internet. That's one application clearly.

Who are doing that? Well, it's affecting -- so we are selling equipment and networks to the people who are -- who own the GPU clusters, so the neo-scalers and similar. We're selling equipment and networks and services and software to people who own the data center, who in turn rent out capacity to the people who own the GPUs, et cetera. And of course, we're selling an awful lot of networks and services and software to the CSPs, the operators of the world who are providing bandwidth to the people who own the GPU factories, et cetera. So it scales across the whole thing.

The last one that I want to talk about enterprise there is the fact what I believe and what many in the market believe is that the whole idea of outsourcing your inference to the cloud, if you're a large enterprise, is great at the moment. But the belief is that more and more enterprises will start building their own GPU-based AI clusters for their demands, so their inferencing demands. One good example of that is Smartoptics.

Of course, we're an early adopter. Of course, we need to have control over our models. We have already invested in pretty advanced AI servers where we are running our models, where we're expecting our customers to use our softwares and to run our cloud-based services in the future. That will accelerate. So it's going to be across all customer segments.

I only talked about connecting the AI data centers to the network now, so kind of North-South traffic for those of you who are more knowledgeable about that terminology. The other thing with AI is, of course, the West East traffic. So the scale up, the scale out, the scale across, which is really connecting data centers in the region to optimize where you run your workloads, et cetera. We are doing that too. And that's a market that I believe is going to continue to grow as these data centers continue to grow.

So it's a fantastic opportunity out there, and it's spanning across all our customer segments and really nearly all of the applications that we are involved in delivering.

I want to take you through some of the numbers, where the numbers are coming from in the quarter, and I will start with a slide that we have used one time per year, namely in Q4 every year. We look at the invoiced customers in the year, and we draw some conclusions. The conclusions are very similar to every other year in the Smartoptics history. It is accelerated, yes. But we can see that a certain amount of our business this year, about 15% of our business is coming from brand-new customers. We can also see that we have a super good retention of customers. More than 50% of the revenue in 2025 is coming from customers that we had in 2020.

We can see that our partner network is expanding. We have more partners who are using our equipment in their bigger solutions to their customers. And overall, we are seeing just an expanding customer base, which is very good for 2026, 2027, 2028 and onwards.

When we look at these customer segments that I talked about, Enterprise, CSP and ICP or Data Center, Cloud and AI, we can see that 2 of them are growing much faster than the third, namely Enterprise. There is also a geographical aspect to this that I will talk about in the next slide because a lot of the business that we have done in Europe is enterprise related. And those of you who have been following us know that several years ago, we started to talk about traction with larger operators in the U.S. market.

So U.S. is a couple of years ahead of Europe there. I will come back to that. But the largest growth we find in our CSP segment. And these are -- there's a lot of customers. It's effectively Tier 2 and Tier 3 operators across the world with some dominance in the U.S. We have now several new customers in the year and several existing customers who are continuing to roll out technology. And I talked about availability of power, where do you build data centers and where do you need capacity?

Well, in the U.S., one place where you have low-cost electricity is Texas. So it's not a coincidence that our biggest customer in 2025 is a U.S. regional operator with focus on the Texas market. We're also seeing tremendous growth in the green segment, the ICPs. That's where we put in everything that has to do with cloud. So that's where you find the neo-scalers, that's where you find the cloud operators. That's where you find the content, the gaming, the Internet exchanges and all of that.

And of course, Enterprise growing a little bit slower. This is heavily dominated by our classical enterprise business, so storage area networks, disaster recovery networks, data center to data center communication basically for security purposes. I'm expecting Enterprise to pick up as AI inferencing is affecting that market more and more in the future.

Looking at our channels, we can see a very healthy growth with our indirect business. The fact that our direct business is growing faster than indirect is, I would say, nearly 100% related to the red on the left, namely the CSP. When the CSP market is growing faster, a lot of CSPs prefer to have a direct relationship with us and hence, our direct business is growing.

I'm very happy with this split. We have super good partnerships out there, super good channel really across the world. It's several hundred people who have contracts with us and can use our technology in their solutions. So a very solid base of indirect partners.

Now we're coming to the geography. And of course, Americas, super impressive. So thank you very much for my team in America, which has grown. By the way, we're investing more in America on the back of this success. So fantastic. EMEA, as I said, the way I look at Europe is that Europe is where Americas was 2 years ago. We are now working. We have closed contracts with larger network operators in Europe. We have delivered networks to larger operators in Europe, and we're sitting on a pipeline and list of opportunities that is highly developed of at least 10 operators in Europe, very, very similar to what I talked about in Americas 2 years ago.

So of course, we're seeing signs of this. The fact that quarter-over-quarter, Europe has developed in a fantastic way since midpoint of the year. Q4 is a very good quarter for Europe. I'm expecting Europe to pick up and be -- it's a very promising market for us over the near term.

Asia, it is a little bit more project-driven. So we can see that when the large projects happen the quarters grow when the large projects don't happen. And with large projects, I'm talking about 300,000, 400,000, 500,000 projects that we do out there. And apparently, Q4 was not one of those quarters. Am I worried about Asia? No, quite the opposite. I think we have great opportunities in the markets that we are addressing. So Australia, New Zealand, Japan, Southeast Asia and so on. And we have recently invested a little bit more into Asia and Africa, I should say.

I mean, it's relatively small investments compared to Americas as a -- for instance, but we are investing and the opportunity is there. I just came back Tuesday morning from Japan, where we have opportunities with Japanese customers. We're continuing our IOWN efforts, and we're continuing the proof of concept with NTT DOCOMO business for the IOWN architecture. We are having good dialogues with a bunch of Japanese companies now, but it will take time, rest assured.

Products. So about a year ago, we did a leadership change or rather put in a new leader for business area Optical Devices. We started to renovate and improve the back end of that business. And we can see that, that has clearly paid off. We are in a much better shape to deliver fast and quality to our customers. We are continuing that investment. So right now, we're building a brand-new manufacturing facility for business area Optical Devices in our brand-new facility in Kista, Stockholm, that's being built for us as we speak. So focus there, automation, robotization of that business.

It is high-volume business. It's several hundred thousand devices that we're shipping every year. So we will invest in that going forward. That's also going to result in a restructuring cost in the first half of the year of about $500,000, but it's all done in -- to capture future growth and capture the momentum that we have. The most important business area still Solutions, Software and Services growing in a very nice way. So all good.

I would like to hand over to Stefan to take you through some of the financials.

Thank you, Magnus, and good morning, all of you. We have a -- we had a strong quarter. We had the revenue increased 37.7% to USD 23.2 million compared to USD 16.9 million last year, and that was mainly driven by high sales in Americas of USD 13.9 million compared to USD 6.9 million. The gross margin in Q4 was down to 46.1% compared to 49.0% last year and was impacted by inventory reserves, write-offs and other inventory-related one-off items.

The underlying margins, however, are very consistent and strong quarter-over-quarter throughout the year. The full year margin that I think we should focus on was stable at 47.8% for 2025 compared to 48.1% last year, and that serves as a better guide for going forward as an indicator for the margin development.

Looking on EBITDA, it was good on USD 3.6 million compared to USD 2.4 million last year and an increase of USD 1.2 million. And that split is USD 2.4 million is related to the revenue increase and minus USD 1.4 million is related to increase in employee benefit expenses that has increased to USD 5.7 million over USD 4.3 million last year. And that's driven by the organizational growth of 7% from 131 to 140 full-time equivalents, and that's including new hires in sales in the U.S.

We have FX impact that worked against us with 8 percentage points. We have inflation and increased variable compensation due to the positive development in sales. Other operating expenses is rather flat year-over-year and quarter-over-quarter. EBITDA margin increased to 15.3% compared to 14.4% last year. Cash flow from operations was super good this quarter was at USD 6.8 million compared to USD 0.2 million last year and mainly driven by the good underlying business and some reductions in inventory.

The equity ratio was 54% as a result from a growing balance sheet. We have non-current assets of USD 9.1 million compared to USD 7.1 million last year. Current assets is USD 39.7 million compared to USD 33.9 million, and it's mainly inventory and trade receivables. Cash is up compared to last quarter, up to USD 7.3 million, but down a little bit from last year that was USD 8.0 million.

We have available credit facilities of NOK 75 million, USD 7.4 million equivalent. We have a high focus on cash and mainly inventory forecast process that has been improved, and we are doing continued management on trade receivables. Non-current liabilities is only USD 0.3 million compared to USD 0.8 million last year. Current liabilities amounts to USD 12.8 million compared to USD 10.7 million last year and it's mainly trade payables and tax liabilities and personnel-related expenses.

Deferred revenue up to USD 12.8 million compared to USD 9 million last year. And the increase is related to stable higher revenues from business area software and services and growing revenues. The working capital amounts to USD 14.5 million compared to USD 14.9 million last year and down from USD 18.4 million last quarter, and that's mainly driven by inventory reductions and increased deferred revenues. The inventory is now on USD 18.7 million compared to USD 12.6 million last year, but a little bit drop from last quarter when it was USD 20 million flat.

And the increase from last year is mainly driven by that we now have longer lead times and the components we have now are more expensive. And the higher inventory level that we set, we talked about that last quarter that is essential to secure the future growth in sales. But the improved forecasting process that we have done during the quarter have reduced inventory slightly. But despite the high level, there is a low risk sitting in inventory.

Trade receivables decreased to USD 18.7 million compared to USD 19.9 million last year, down from USD 19.0 million last quarter. We have good collections in Q4 and this quarter, the sales was more evenly distributed over the month compared to the average quarter where we actually have a bump in the last month of the quarter. And we don't see any risk in trade receivables at all.

Trade payables increased to USD 5.6 million compared to USD 5 million. And net other short-term liabilities amounts to USD 17.2 million compared to USD 12.5 million last year, and the increase is mainly driven by increase in deferred revenue. And then we also have a little bit of tax liabilities of USD 1.7 million, a slightly bump up from last year when we had USD 1.1 million.

Thank you, and back to you, Magnus.

Thank you very much. Like last year, the Board intends to propose a dividend of NOK 0.6 per share. So no change there. This is, of course, pending AGM approval later in the year. I want to talk a little bit about how we're viewing our future right now. This is more or less the same slide that we've been using now since we introduced our new long-term ambitions.

One major difference today compared to 6 months ago is that we need to focus on our core markets. We need to focus on our business because we're doing great. There is no doubt about that. So continued focus on our 2 big home markets and of course, the initiatives that we have running. So you notice that when we talk about new growth drivers, we have now removed M&A from the chart. And the reason why we've done that is we want to convey that we are not actively working with that question at all at the moment.

Maybe we will later in the year, we shall see and maybe opportunities will arise that we choose to pursue and go after. But at the moment, the focus is on what we're doing. And of course, adding new growth drivers, committing to major accounts, yes, we are doing it. You can see it in our product development. We're developing much more advanced products for release later this year and next year. We are developing the company in all aspects, anything from compliance to procedures and how we conduct our business.

We are going into the new geographies to a very large extent, following our customers also, don't forget that. It is not going into South America with a completely brand-new -- brand-new play, it is the same. The hyperscalers are building data centers in Mexico, too, meaning our network operator customers needs to connect those data centers. So the business model is the same. So it's all very controlled in a sense.

And we are investing more in our software automation and AI tools. This is both external, meaning softwares that we will sell to our customers, both as part of the SoSmart network orchestration platform and as [indiscernible] software packages that will help them automate their processes. It's all about going after the OpEx of our customers and help them to improve that.

And also our internal tools. AI is now something that scales across our whole company. All functions are building a pipeline and a road map for our internal tools development team. And I have really good hopes that, that's going to dramatically improve the way we conduct our business in 2026.

Remember that we are a company that can do this. In order to do this, you need software skills, you need to have an understanding of how you develop these architectures because the architecture is the important thing here rather than the actual coding and we're in a very, very good position to do that.

Looking forward, a great market out there. We maintain our ambition to grow our market share by 2 to 3x in the relevant markets that we have been talking about, and we're continuing to believe and to target the 13% to 16% EBITDA range -- sorry, EBIT range that we have been discussing before.

Now the question is, of course, how big is this market and how fast is it growing? And we will have to come back with that. We have, through 2025, talked about 5% to 6% growth in the market up until 2030. We know that the industry analysts are now working their numbers, working their Excel sheets to figure out how fast is this really growing. I believe we will see a larger number in the first half of 2026. So when we come back in Q1 or Q2, we will be able to share some more projections on that.

With that, I'm happy to take questions, and I suggest we start in the room, Per.

Yes. Any questions in the room?

So Markus Heiberg, SEB. I have 2 questions. I can take them one at a time. So the first one is on several competitors are flagging now supply constraints into 2026 and long lead times. How did that affect your Q4 and your outlook into the next quarters?

So far, it has been mainly positive. We are clearly winning new accounts because some of our competitors, especially the larger ones are, of course, super focused on hyperscaler business. We have also seen some of our competitors coming into 2026 pretty much sold out, probably not completely, but to a large extent. That is, of course, positive for Smartoptics. The mid-sized players are turning to us for help to get deliveries. They need to connect their customers, and we have several wins of that nature.

The good thing is that these are not decisions you take lightly. You don't bring in a new supplier for transport networks and optical networks and throw them out a quarter later because you're done and dusted and you can get deliveries from someone else. It is strategic choices that these people do to bring us in. And my expectation is that we will stay there for a very long time, just as normal. The only difference is that it's faster now.

So you didn't see any meaningful impact in Q4 or?

Yes, we did.

And the second question is partly related because we see the surge in memory prices and also availability of components. So 2-parted question there is, how is that affecting the discussions with customers, the end-demand projects ramping up? Are they being impacted? And the second part of that is, of course, your own gross margin and how that will affect 2026?

So I think it will affect nearly all our customer dialogues -- all our customer dialogues this year are, to some extent, going to be related to delivery performance and our ability to deliver. So it's going to be a very important topic to us. Stefan said that we have, in a disciplined way, worked through Q4 with our inventory. And if anything, I'm expecting our inventory to go up now. That's a good thing for us.

If we can deliver, we will win business. And there are very long lead times, not only on memories, as you said, also on optical components, every optical component that sits inside our solutions is typically half a year lead time. So my procurement team is now working with Q3 and Q4 demand. That's, of course, a difficult task. But to me, it's more problematic if we sandbag that than if we have a slightly higher inventory and a little bit more working capital. That is not a big problem for me.

So it's very important, no doubt. I think the margin impact of this will be marginal. I don't think that's where we should look. We should look at how much inventory we have and consequently, how much we can deliver. So far, so good. We still have very short lead times. We are operating with 4- to 6-week lead times typically, which is extraordinarily good in our industry right now. And of course, our ambition is to maintain that through the year. That's going to be a real power play in 2026 and 2027, I'm sure.

On the other stuff, you mentioned memories, and I can just say that we're good for 1.5 years or something like that. So we have secured that position.

That's very good. So just one final follow-up there is on the gross margin. I think you mentioned that it will -- you expect that to be sort of flat into 2026 or you should look at the 2025 gross margin and that's a good guide for '26? Or are there other things that we have to keep in mind on the gross margin for '26?

No, I think it's a good guidance. So 2024 is very similar to 2025. It's going to fluctuate over the quarters, as Stefan mentioned, but I think it's a good guide for the future now that we will operate in this range, 47% to 50% for the foreseeable future.

Any other questions in the room? No. Then let's go to the call. So we have Christoffer Wang Bjornsen from DNB Carnegie.

Can you hear me?

We can hear you.

Great. So just wondering, you have like an interesting comment on the East-West traffic. I think you're primarily and historically, your bread and butter has been metro area networks and more like, let's call it, North-South. So can you help us understand kind of what's prompting you to start talking about like within data center East-West traffic in that part of the network?

Well, what's prompting me is that we're doing it with customers. We have a fairly large project in 2025, which is all about that connecting AI data centers to each other over a geographically dispersed area. So typically, what we're talking about here is probably below 100 kilometers between all data centers. So that's what's prompting it.

Why is this important? Well, as as the knowledge and as the AI companies are developing their methods, they will need to distribute the workloads across many data centers for several reasons. One thing is the whole model routing or whatever you call it, right, where do you run a specific request? Where do you have the resources available to run a specific request? And then it's also, of course, a question of scale, how big data centers can you build?

Well, there is an upper limit there. Although I have had the pleasure to see one of these data centers, they are huge. That was one of our neo-scaler customers that I had the pleasure to see. They are huge. But there is an upper limit, then you need to go to a second location and a third location and so on and so forth. and that will up the requirement for data center to data center or front end to front end or however, East-West type of traffic. So it's as simple as that. We're doing it.

But still kind of coherent pluggables for longer distances, like so it's between data centers, not kind of within the data center rack to rack.

That's correct. What I'm talking about is between data centers, and it's absolutely coherent technology. In fact, it's our whole product portfolio, well, maybe with the exception of devices, of course.

And then on the inventory, so it's been kind of steadily growing through like sequentially over the last couple of quarters, but now it's down. So that downtick in Q4, is that a hint that you're expecting kind of lower top line momentum in Q1? Or is it more about just demand pulling so hard that you haven't been able to continue to grow the inventory? Some reflections on that. It seems a bit cautious and why?

I think it's 2 things, Christoffer. One thing is that when we started Q4 on the 1st of October, our ambition was to optimize our inventory, of course. And I think at least I have kind of changed my mind on that topic. It is not that important anymore. The other reason is that -- so meaning we worked with inventory optimization for -- through the quarter. The other thing is, of course, that Q4 is a very big quarter, and we have delivered an awful lot of products in Q4, hence, inventory goes down before we can backfill it.

Okay. Then we have Oystein Lodgaard from ABG on the call as well.

Congrats on the strong numbers. I have a couple of questions. Maybe we can start with, you mentioned on the call some new product launches, more advanced products than what you have in your product portfolio currently. Can you say what kind of products these are or what kind of use cases they are aimed at? Is that more data centers or ROADMs for telcos?

Certainly. So if we look at the journey that we've been on for a number of years, moving from being basically 3, 4, 5 years ago, a point-to-point data center network provider into developing our ROADM portfolio, aiming first at the metro networks, then going after the regional networks. So one natural evolution for us now is to continue that journey, meaning improve the performance of our ROADM family to be able to do longer reach and also in the other direction, more capacity to introduce a broader spectrum, what's referred to as L-band technology, as an example. So more of that.

If we look at our transponders, muxponders, the Layer 1 products in our family, more advanced versions of that. We have just released our 800-gig transponder now, which I think will become a high runner. We will develop more of those and more advanced versions of our transponders, muxponders more multiservice type products.

Yes. And then, of course, continuing our efforts at the edge where we still see a lot of opportunities in the sort of low-cost, both ROADM-based and kind of active-passive type products. So it's across the board. And last but not least, our software platform, which today, I consider to be phenomenal and it is really becoming a mature tool for our customers to really take advantage of. We have a lot more to do on the automation, AI side. It's not necessarily AI, but certainly automation, data collection, multi-vendor, there is a lot of development that's ongoing there that I have really strong belief in the near future.

Perfect. And one other question on the near-term growth or kind of the growth momentum going into 2026, and it's a 2-part question. One is we've seen, like also was mentioned previously, several of your competitors have very long lead times. That's kind of a more -- something that has come up relatively recently. Does that mean that -- I guess there is big opportunities like you mentioned in customers switching providers to you because you are able to actually deliver on a short notice. Is that still ahead of us? Or did you get much boost from that in Q4?

We did get boost from that in Q4 for sure. It was not -- I wouldn't say it was instrumental in any way. But these are typically mid-sized operators, those are typically the ones that suffer when this scenario happens. And it also happens to be a sweet spot customer type for the products we have, the kind of company we are, the responsiveness that we can offer them. It has happened. There are probably a handful of new accounts that we have won through Q4. But the world is big, and there are thousands of these, and it will continue, I'm sure.

And on -- do you still have some large customers now still ramping up, as new customers ramping up volumes with you, for instance, these neo-scalers, et cetera? Or kind of all those big customer wins at full pace already in Q4?

No, I would say nearly all of them are ramping up, right? So it takes time to grow accounts. Most of the accounts that we have been talking about in the past, Crown Castle, WIN, all of those type of accounts that we have publicly talked about. I mean, there is still a huge growth possibility in all of those accounts as we qualify ourselves for new applications, as we become relevant for new type of network scenarios. And of course, as they grow their business, which they are on the back of data centers rolling out left, right and center.

Perfect. We have a question on the portal as well from [indiscernible]. You aim for 2 to 3x market share for 2030. What market growth do you expect in the same period?

Yes. I talked about that just a few minutes ago. I think it's a little bit early to say. So for now, I think 5% to 6%, and we will come back in the first half of the year as our friends at Cignal AI develop their models because that's what we're relying on for that purpose. So we're going to come back to that. It will not be lower.

Perfect. Thank you. That was the last question.

Then thank you very much. Have a good skiing holiday to all of you, Norwegians, and talk to you again in a quarter. Bye-bye.

Good morning, and welcome to Oslo and Hotel Continental. We are here to report Smartoptics' Q3 financials. 

We have been doing this. This is our 18th quarterly report. It is the first one as a listed company on the Oslo Stock Exchange. So I'd like to welcome all new friends, shareholders, and followers to this session. Through this period of 18 quarterly reports, we have more or less been talking about the opportunity that we are living in right now. Our story has never really changed dramatically. The opportunity has been there, and we have executed according to our business plan to reach our targets, and that is the intention to continue with. 

So today, of course, starting off like we always do with some highlights of the quarter. It is a remarkable report in all aspects. So I'm going to let the numbers speak a little bit for themselves here and try to focus on what I believe are the key things in this report.

So starting off on the customer end, and our market, and what kind of business we are doing. And I think if we roll back time 3 or 4 quarters, I was talking about an emerging market related to AI infrastructure and the AI boom that all of you read about every day, and see on TV probably every day. 

Back then, I was talking about AI potentially driving our business with a certain certainty from a number of perspectives. Number one, being another contributor to the ever-growing demand for bandwidth that has always been there, and that is foreseen to always be there. For us, being a supplier of high-capacity transport of data, it doesn't really matter what grows. Of course, some elements in the market are growing quicker than others, and that's important to understand, to acknowledge, and to develop our products to suit those segments. But in general, whatever grows when it comes to bandwidth, it's good for us. 

So that was number one when I talked about this 9 months ago or a year ago, the ever-growing demand from bandwidth, having a new best buddy called AI. The other thing that I talked about was much like any other compute technology that we have seen over a very long time, it starts off in a data center. The majority of the transactions in any clustered data computer environment goes on within one data center. And sooner or later, you will come to a point where you need to distribute your infrastructure. 

I foresaw that, that's going to happen with AI, too. And I think today, we have proof points that it has happened and it will continue to happen from now on. And that's important for us because the majority of our business that we do is to connect data centers with each other. And as AI grows out of one data center and all of a sudden sits in several data centers in a city like Oslo or any other city, that is very, very good for us. 

We have secured orders for these particular applications. And we have seen how NVIDIA has released new products supporting that distributed model in a completely different way than they happened in the past over the summer. The orders that we have secured, among others, from so-called neo-scalers or neo-clouds, that is a very important thing to note in this report, because this new breed of companies, I'm going to come back to them in a while and explain what they are, are expected to be a really important piece of this puzzle in the future. 

Also growing in that space that I just talked about, of course, the United States of America is an important market. And you can see now that the U.S. continues to drive our revenues as it has over some quarters and as I have been saying for the past 4 years or so. An interesting new thing in this report is that we are growing in all our business areas. That's another thing that's important to note, I think. And I'm super pleased that we see traction from the efforts that we have put into our business area, optical devices. I will come back to that, too. 

Profitability is good. It is not quite where we want to be in the long term. We want to continue to push this upwards. But having said that, the last couple of quarters gives us an awful lot of confidence in our business model and what we are doing. And of course, continuing to invest, probably investing a little bit more than we initially thought, moving into the next year, is a good thing for us. So to capture the future. I want to remind you that in my job, all perspectives matter. This quarter matters, next quarter matters, but what matters most is the long-term success of the company, no doubt. 

For the new audience, I want to take us one step back and talk a little bit about our product offering and the customers using our products to really give you a chance to pick up on the knowledge that we have tried to convey over the years. So what is it that we do? Well, we develop, design, manufacture hardware and software, and associated services to build network solutions that are transporting multiple terabits per second of capacity. 

So, as you understand, this is not consumer technology. This technology is used for connecting data centers. It's used for connecting cities with each other. It's used to, as for instance, connect mobile base stations to the Internet or to the cloud or wherever it's going, rather than focusing on the consumer side of the network. So these are really the super backbones of the Internet that we are talking about. 

Who buys that from us? Well, we categorize our customers into 3 customer segments. You see them top left on this slide. So, enterprises, this is a market that's kind of Smartoptics' home market. This is where we're coming from back in 2017, '18, '19 when we started off the new journey for the company with the new products and the new strategy. It was a large part of our business with enterprises building data center interconnect networks. 

So an enterprise, whatever vertical have their data centers and wanted to outsource backup and security systems and so on to another location. That was the majority of the business. It's still a very important business for us. We're receiving orders every week from new customers in that segment. And as I said, it's really anything. We have a lot of healthcare, hospitals. We have a lot of manufacturing companies. We have trading companies. We have banks, we have government. Yes, everything really. 

The second customer category here, network operators, is something that we started to develop products for in 2018, 2019. Why did we do that? Well, to build a business where our re-occurring revenue would be stronger. When network operators select the technology to work with, they roll it out over many years, and the volumes are much greater. We got success quite early on in this segment and started to roll out products already in '19, '20, and it is today the largest part of our revenue. 

The second customer category here, network operators, is something that we started to develop products for in 2018, 2019. Why did we do that? Well, to build a business where our reoccurring revenue would be stronger. When network operators select the technology to work with, they roll it out over many years, and the volumes are much greater. We got success quite early on in this segment and started to roll out products already in '19, '20, and it is today the largest part of our revenue. 

The third, which has been the smaller of the 3 segments over the years, that I expect are going to grow on the back of what I talked about on Slide #1 is cloud and AI. So really, the application here is the same as I talked about in the enterprise community. It is about connecting data centers to each other in major metropolitan areas. The difference here is that it's not 2 or 3 data centers, it's probably 3, 4, 5, 6 data centers in each metropolitan area. 

We have global customers that have rolled this out over several years. When we last looked at it, I think this market segment was around 20% of our business, maybe 25% some quarters. We don't track this every quarter because we have so many purchase orders that we need to go through and look at the segmentation. So we do it typically once per year, and we'll come back when we report Q4 with a view on this. But I expect this to continue. 

You heard me saying data centers there several times. And what's important to understand is that data centers is driving growth in all of these segments. When the hyperscalers are building infrastructure in a particular geography, new data centers popping up in any state, Texas, wherever, our operator customers are getting orders for capacity in and out of those data centers, and they are building new networks and modernizing the networks they have to support that growth, and that is across the whole planet. So data centers are tremendously important for our business. 

So when we started this journey, we set out to be the low-cost alternative in this market, low cost by design, choosing the ASICs that drives down the cost, implementing the most modern of protocols and standards rather than supporting the whole legacy of telecom technologies that are out there. That was in our DNA, and it is still in our DNA. And the majority of the business that we have won over the years is due to that fact that we have been the cost-effective alternative compared to very large companies. 

That changed about a year ago when customers started to come to us and say, we have selected to work with Smartoptics because your software platforms, you can see it down on the left corner here, and orchestration software for networks is so much better. The ease of use it offers is way ahead of your competitors, and the simplicity of managing traffic in the network as a for instance, exceeds all of your competitors. So that was a good day for me because this is a product that I have held dear to my heart for a very long time, and I believe it's going to be a key element of our offering from now on and all the way into the future.  So very important. Software is driving our revenue, too, and software is making us a more attractive partner for our customers.

We have very low customer churn. This is something we also look at typically once per year. And when we do, we see that a very large part of our revenue, typically more than 50% of our revenue, is coming from customers that we had 4 and 5 years ago. And we're adding new customers every year and new partners. So very stable in that sense. 

We have a global sales force, I should say, global with a pinch of salt because there are, of course, markets where we choose not to operate, Mainland China, Russia, and so on. Our sales force is spread across EMEA, Americas, North America predominantly, but also South America and parts of APAC, but certainly not everywhere. 

A strong asset in Smartoptics is the global network of business partners that we have, reselling our products, distributing our products, taking in our products, rebranding them to their products, and so on. It's a wide range of business partners in here. The market that we are addressing, the global market for optical transport, is estimated to be around $16 billion. We are addressing a growing part of that $16 billion, meaning our products are suitable to be used for certain applications, but not all applications. 

Typically, we are stronger in the metropolitan areas, in the regional networks, compared to the really long-distance networks, and especially things like subsea under the Atlantic or things like that. But we are developing our products. We have introduced an awful lot of technology into our products to sort of put us a little bit into that long-haul market, and we are winning fairly large networks now. I think the longest single network we have installed is in Mexico. It's about 1,300 kilometers, all optical without any electrical regeneration. So that's a pretty sizable network. So we're growing into that. And we've typically said that we address around $5 billion of those $1 billion, and I think that's growing day by day. So that was an overview of the company.

I'm going to take you into the Q3 and look a little bit at the revenue before Stefan comes on and talks about the financials. 

As I've already said, the U.S. is remarkably strong. The most important thing for me here is that we have had 2 strong markets, and now it seems like we're developing a third market that is meaningful, APAC. APAC has been growing very nicely from very small numbers over several quarters. Now we have more contributions again from Australia in this quarter. So we can see revenue jumping up a little bit. But that's good. APAC will continue to grow and will eventually become an important market for us. 

Looking at this slide, I mean, the obvious thing that stands out is Americas. I will talk a little bit more about that on the next slide. Having said that, EMEA looks weak. I'm not so worried about EMEA. We have secured a couple of really nice projects in the quarter where we have really started to deliver hardware and software, but those are projects that will run over several years, build-outs of networks across Europe. We have a strong pipeline in EMEA with, yes, at least 5, 6, 7 really good projects that are multimillion-dollar projects that we are working on that will contribute to our 2026 revenue. So I think that EMEA will come back and will contribute nicely in 2026 and onwards. 

Why are we so strong in America? And so, a little bit back to education here to talk a little bit about the customer segments. I talked about operators, I talked about enterprises, I talked about clouds. So over the past couple of years, we have developed a number of new verticals, new markets for us, new customer categories. And the 3 that I'm listing here have grown in importance for the company quite dramatically. And this is on top of the business that we are doing with enterprises and various other mobile backhaul, as an example, devices, and a lot of other verticals. I'd like to start by just going through what I think about these 3 segments and then give a little bit deeper explanation on at least one of them. 

So regional operators is something that we have talked about in the framework of our large account strategy for several years. Today, we are servicing somewhere between 5 and 10, depending on where you set the revenue bar of customers like this in the quarter, and in past quarters, we're seeing three, four of them delivering meaningful revenue. These are accounts that will be with us for a very long time. They are constantly rolling out new bandwidth into the networks, and they have large networks. So this is, from a revenue standpoint, a very important piece of our business today and will be into the future as we continue to grow these types of accounts and continue to add more accounts like this as our customers.

In terms of what they do, they have an awfully broad product offering to their customers. One should know that this is typically business-to-business, meaning that they are delivering bandwidth to enterprises, data centers, other operators, and so on, rather than to households, fiber-to-the-home, et cetera. And an important driver here are the data centers that are growing up like mushrooms all over the planet, cloud connect services. When a new data center is built somewhere, everyone in the area needs to get access to the content in that data center, and everyone will start ordering capacity into that. Data center to data center communication for the hyperscalers and others, et cetera. So large customers of our regional network customers are the hyperscalers. So very much an indirect drive from hyperscalers.

Good revenue contributor now and into the future. Neo-Clouds, Neo-Scalers, this is a new thing for most people listening to this. It's a new thing also for me since about a year ago when people started to talk about these types of companies. It's really a new class of cloud providers that are exclusively building their infrastructure based on NVIDIA GPU technology. They are offering basically GPU as a service. So for enterprises and whoever really needs to run jobs in a GPU cluster. So you have a couple of examples of the services that they do there.

In what way are they different than the hyperscalers? Well, clearly, they are, they have a more narrow product set. They are not a one-stop shop for all cloud services, but they are specializing on this. I think another important distinction is that they are predominantly software companies having their algorithms and things like that as their core competence, meaning a company like us become a very relevant business partner. They will go out and look for best-of-breed, lowest possible cost ways to connect their data centers.

We have secured three of these now. Who are they? Well, there's many out there. If you Google who are the top 10 Neo-Scalers, you will find the three that I'm talking about on that list. Most likely, I'm sure there are several lists, but the ones that I've seen, all of them are on there. And we are working on a couple of more at the moment. So hopefully, we will continue to succeed here. It's going to be important for us to have a footprint in this world as it's expected to consolidate over the years. So being with the leaders here is going to be important to us. So really good potential, not necessarily super important for our revenue in the quarter, but really, really good potential.

The third market that I would like to talk about is the rural operators. Why do I want to talk about that? Well, it has potential. It's about 1,000 operators in the U.S. servicing communities around the country, typically in the rural areas, selling things like fiber to the home, but also services like mobile backhaul, middle mile, interconnect, data center to data center, et cetera. But their core existence is around servicing the population in rural America. There is 1,000 of them. We probably are approaching something like 5% of them being our customers. The important thing here is that this has potential to become yet another enterprise business where we every week get new multi-hundred thousand dollar orders from this community. And once you're in there, once you're servicing that community, there are many people to support, and we have really set out to focus on this community. That's important.

So this is where you see the government funding. It is in this market. Most people are familiar with BEAD, which is a CapEx program offered by the U.S. government to help them to build fiber infrastructure, electricity infrastructure facilities, data centers, and technology for servicing the community with broadband. BEAD is a big program. It's great for some, and it's not great for others. The feedback that I'm hearing about BEAD is that there is quite a lot of red tape around it. Once you step into BEAD, you have rules and regulations to comply with that they may not have capacity to work with. And the other thing is the fact that it is a one-time CapEx support.

There are better programs for this community. One is the USF, Universal Service Fund, which is really a tax that all Americans are paying to fund this community. And that's long-term operational support for the rural parts of America. I would say all of these 1,000 service providers are getting government funding through the Universal Service Fund. It's been there for a very long time. So it's probably the more important of the two.

So to finalize, over and above where we have been, we have developed a number of new customer segments that have significant future revenue potential, where 1.5, I should say, are contributing also in this quarter significantly.

This is a slide that I'm very happy to present. It is how we are doing in our different product areas. Most of you who have followed us is nearly everything I've talked about up until today, up until now has been about solutions, software, and services. Those are two product areas that are nearly one-to-one 100% associated with each other. When we sell our solutions, we sell our software and services. We typically don't sell our software and services when we don't sell our solutions and so on. The difference between the two is, of course, software and services is a continuous service that people buy for many, many years. Some people do that with networks too, others buy project by project. So a little bit different pace on the two, but certainly talking about the same thing.

The fact that those two are growing really nicely, not a big surprise. They have always done that since 2017, '18. That's also where we have made all of our investments up until, or rather the majority of our investments up until about 1.5 years ago when we said, look, we have this third product area, optical devices, where we are selling, we act as a very advanced distributor of some optical components where we have software to enable support for those optical components in a very broad application space. It's always been a great market for us. We receive several thousand purchase orders every year. We ship 300,000 products.

So it has really been the stable piece in the early days, and it has always contributed with profitability. About 1.5 years ago, we said, look, we cannot have a situation where this product area is dragging down our growth. So we employed Mr. Björn Andersson to lead that product area for us with the intention to have it growing at the same pace as the company overall. And this quarter, it clearly is. So we're starting to see the product area business -- optical devices catching up and showing its potential.

With that, I would like to hand over to CFO, Stefan Karlsson, to take you through some of the numbers. Welcome, Stefan. 

Thank you, Magnus, and good morning, everybody. We see the revenue increased by 46.2% to SEK 19 million compared to SEK 13 million last year, and mainly driven by strong Americas sales with SEK 10.9 million compared to SEK 5.7 million last year. The gross margin amounts to 49.5 percentage points compared to 47.4% last year, and is related to product mix, and that we are seeing increased tariff compensation in the U.S. 

The EBITDA was $2.4 million compared to $1.1 million last year, an increase by USD 1.3 million, of which $3.3 million is related to revenue increase and a slight margin increase. And then we have 1 million negative that is related to increased employee benefit expenses up to $4.8 million from $3.8 million, and that's driven by organizational growth of 8% from 124 to 134 full-time equivalents. We have an FX impact of 6% and inflation, and increased variable compensations due to positive development in sales. 

Then we also have other operating expenses has increased by SEK 0.9 million, of which SEK 0.7 million is related to the uplisting to Euronext Oslo Bors, corresponding to 3.9 percentage points in margins in the quarter and 1.4 percentage points year-to-date. 

The Q3 margin was then 12.6% compared to 8.3% last year. And excluding nonrecurring costs for the uplisting, the EBITDA margin would have been 16.5 percentage points in Q3 and 13.2% for the 9-month period of '25. 

The operating cash flow in the quarter was negative SEK 0.4 million compared to a positive of SEK 5.6 million last year. And the big drivers to this is that inventory has increased with NOK 3.2 million in the quarter, and that's mainly due to longer lead time for components driven by increased global AI-related investments. We also see that trade payables has decreased with NOK 1.7 million in Q3 due to timing of the due dates. Net collections of trade receivables in Q3 improved the cash by NOK 0.8 million. 

So, looking on the balance sheet, we have an equity ratio of about 55% compared to 59% last year, which is a result from a growing balance sheet. It comprises of noncurrent assets of NOK 8.8 million compared to NOK 7.7 million last year, and includes our new ERP of NOK 0.6 million that we will amortize over 5 years, and that we start to amortize now in Q3. Current assets is NOK 40.3 million compared to NOK 30.6 million last year, and it's mainly inventory and trade receivables. The cash is now at NOK 1.7 million compared to NOK 9 million last year and is down NOK 1.4 million from last quarter. We have available credit facilities of $7.5 million, equivalent to NOK 75 million. And we have increased focus on the cash and mainly inventory activities, and continued management of our trade receivables. 

On the liability side, we have noncurrent assets of NOK 0.3 million compared to $1.2 million last year, and this is mainly lease liabilities. We don't have any long-term loans at the moment since all are due within the year. Current liabilities, excluding the deferred revenue, is $11.3 million compared to $10.6 million, and that's mainly trade payables, tax liabilities, and personnel-related expenses. Deferred revenue is $11.1 million compared to $7.5 million last year. And the increase is related to a stable high revenue share from the business area Software and Service, and our growing revenues. 

The working capital is now SEK 18.4 million compared to SEK 13.3 million last year and is mainly driven by the revenue growth. Inventory is now SEK 20.0 million compared to SEK 14.6 million, and it was SEK 16.8 million in the last quarter. And it's, as I mentioned before, mainly driven by longer lead times on components. And the higher level of inventory is also, therefore, good for the short term to secure future sales. However, the goal is long-term to reduce the inventory over time. But despite these high levels, we are seeing a very low risk in inventory.

Trade receivables increased to $19 million compared to $14.7 million last year, and is actually down from NOK 19.8 million last quarter. So we have good collections in Q3 and high sales in the current quarter that define that level. And we see no risk in our trade receivables. 

Trade payables are NOK 6 million compared to $4.2 million, down from $77 million last quarter. And the lower level is related to timing of due dates of our liabilities. Net other short-term liabilities increased to $14.6 million from $11.8 million, and that's mainly related to the increase in the deferred revenue that is now, as I mentioned, $11.1 million compared to $7.5 million. There are also some small tax liabilities of $0.6 million included in this number. 

Thank you. And back to you, Magnus. 

Thank you, Stefan. All right. I just want to talk a little bit about how we see our future evolving, what big plans we have ahead. This is a slide that we released in quarter 2, where we thought that talking about the next 5-year period for the company is more meaningful than talking about a few quarters. And what we introduced back then was a couple of new growth drivers that you see on the right of this slide. Of course, focusing on our home markets, focusing on what we do, focusing on the stuff that I have talked about earlier today, is critical and will be critical going forward. We do not intend to abandon any customer segments at all, but rather build on what we have, pretty much as I explained earlier. 

Having said that, committing to major accounts is something that we have started to do. And I'm not really talking about our large account strategy here. I'm really talking about how do we build a company that can service the largest customers on the planet. Those are typically Tier 1 operators and hyperscalers, and similar organizations. 

So, building the backbone even stronger in areas like governance, IT security, and a broad range of areas is something that we have set out to do quite a while back, and we have come a very long way. We are scoring very high in things like EcoVadis rating and so on, but we want to continue to build a stronger backbone in the company.  That's really the key thing there to make us an attractive player for the largest accounts in the future, well underway.

Expanding our efforts in new geographies, also well underway. We have a team in South America. We're winning business in Mexico, in Colombia, in Peru, and a few other spots in that market.  We have our first employee in Japan with us since a couple of months. We have employees in Malaysia with us now supporting our business there. We're making additional investments into Asia by moving more resources out there to be there locally to support our customers.  So, another area that is really well underway. Africa is also an interesting continent where we have started to do business predominantly in South Africa, Kenya, Namibia, and that area. But there are other places in Africa that are of interest and will be of interest going forward.

Maybe the most important one here is the top right corner, where we're talking about AI and software automation. So, AI is many things to us, as I said. Maybe the most important one is the fact that it's driving demand for our products. But other areas include how can we incorporate more automation, more data streaming, and more AI into our product offering, not only to make our products more attractive as they are, our software platforms more attractive as they are, but also to start generating new revenue streams from that side of the business. This is something where we are early stages, but building our strategy and our plan. 

The third area where I think AI and automation is important for us so look, when you are a company of our size, it is very easy to overdo the OpEx part of your business. It's very easy to start to see the need for various functions in the company that you previously, for instance, relied on partners, legal, HR, and whatever it might be.  And I think also on the operations side, we see those type of phenomenas happening. And we are, and I am committed to avoid that rat hole, to be perfectly honest. And our means to do that is to now heavily invest in software tools within the company.

We want to create an AI company out of this. So, it's not only going to be a team of AI architects that we already have in place. But that knowledge, that competence is going to spread across all functions in the company to maximize the advantage of this. It's an opportunity that has never been there before to run efficient companies. But it requires software skills, and we have software skills. So, we are extremely well-positioned for that. 

The fourth area that we talked about in Q2, I have kind of grayed out here, not to set any expectations, and that's M&A. We are interested in it. We talk to our customers predominantly about it because they are a good source, meeting a lot of people, meeting a lot of interesting companies, and they can help us. They can guide us to interesting conversations as we move forward. 

But we have not created an M&A strategy. We do not know what we want to buy. We have a pretty good idea on what we don't want to buy, to be honest. And I think buying companies that look exactly like us. Well, first of all, there are no such companies out there so that would fit our profile, our modern software platforms, et cetera. 

So that's probably a no-go, but it's going to be something relevant to expanding our technological footprint. We will see what that is. When the time comes, we will talk more about it. We will probably zoom out of this for a while now and focus on our organic growth because, as you can see, it's working really nicely. We have the ever-growing demand for bandwidth behind us or around us. We have AI, the AI infrastructure investments going on around us. We don't really need M&A at this point, in my opinion.

So where do we want to go? Well, we talk about market share because it's more interesting to me than to talk about a specific number. But the way you should read these numbers is we're in a growing market. And as you can see, the piece of the market that we measure ourselves against, those SEK 5 billion or so that I talked about earlier, is foreseen to grow by about 6% every year. We will see what happens with that. Maybe it will grow faster. I don't know. The future will reveal that. 

In that market, we want to double to triple our market share, and that means probably triple to quadruple the company. We want to do that maintaining our profitable growth ambitions, and we want to scale back to where we have been for quite a number of years in the history of the company, targeting EBIT levels of 13% to 16%.

Having said that, we are done for today with the reporting, and I'll be happy to take questions. Do we have any questions in the room? 

Good. Then we have Christoffer Bjørnsen from DNB Carnegie on the call. 

Congrats on the great quarter, exciting times. I think just can we start off on the comment you made that you've seen now some initial order momentum with the Neo-Cloud part of the market. Maybe kind of you already touched upon it, but I came in a bit late here. Just expand a bit on like what the size of this opportunity is and how we should think about that into next year and so on. 

You kind of previously had a target of reaching $100 million of revenues for '25 or '26. You kind of then left that target, but now it seems more profitable, I guess, at least for '26. So, I guess, start with just like your thinking around this whole dynamic and what it actually means for you guys. It's kind of new. 

Sure, Christoffer Bjørnsen. Absolutely. May I just first clarify, we never left that target. What we said was it's not meaningful to run a company with that target. It is simply too low. That's the reason why we don't talk about it. And I've said for the past 4 years that the opportunity is there to reach it. So, within the time frames that we have talked about. So, we'll see if we reach that old target or not. What matters to me is the new target and the momentum that we have in the company when we reach that target. 

So, having said that, what is the potential with the Neo-Clouds and Neo-Scalers? And my answer is I wish I knew. This is a new market. It's a new breed of companies. It's completely new services that are offered, basically GPU as a service to simplify things a little bit. What the potential is, we shall see. I said that they are not super critical in our revenue in the quarters. I think to date, we're probably done 1 million or 2 million with that segment. 

But listening to peers in the market, listening to industry analysts, clearly, they are seen as a new breed with really good potential. There are several of them. I said Google the top 10, and you will find the three that we have done business with. But those top 10, there is a long tail of other people who are entering into this business now. So I'm kind of expecting, based on what I'm hearing from the industry, that we will see consolidation in that space. We will see some people really succeeding, blowing the roof off of the expectations. We will see some people probably not succeeding to the same extent. So I will have to come back to that. And I think we will probably know in a year or two what that market really looks like.

And then following on with another question on this dynamic ish, I think is, as far as we understand, one of the secrets of your success as a business, especially in the device business is how you've been able to make your, let's call it, third-party optical pluggable interoperable with more complex, bigger systems from some of your competitors in terms of how you program these transceivers. So can you just expand a bit on what kind of moves you made there in the last half year or so, if you added any interoperability with new systems from anything that's relevant to the Neo-Cloud and so on?

Specifically in the device business, yes. So what moves have we made? Well, we -- I mean, it's basically a very large part of what you're talking about is happening in our partner community, where we provide the software and the manufacturing environments and the products for them to go and do this business. What have we done? Well, I would say on the optical device side, we have a punch list of probably 10, 15 areas that we are now to varying degrees done or on our way to improve. And of course, our manufacturing environments, software platforms for doing what you described, is one important element of that.

When it comes to supporting new technologies, I'd say obviously, a new thing since a couple of years or sorry, since the last year or so is support for 400, 800 gig in NVIDIA platforms and things like that, and we are supporting that right now. I should say also that the Neo-Scale business, the Neo-Cloud business that we have done is not on the optical device side. It is on the solutions software and service side. It is data center to data center networks that we have delivered to them. So it is unrelated to business area optical devices, where we have thousands of customers across the planet.

So you're saying is that you have, over the last year or so, you've gone from not having interop with the NVIDIA ecosystem to now supporting it?

Correct.

And given that devices haven't really seen any momentum in that area as of yet, that's kind of an untapped potential. Is that the way to read that?

To an extent, yes. I mean the optical devices is broad, right? I'd say the lion's share of what we do is going into enterprise for general-purpose applications, some of it going to operators as well, of course. Data centers is a potential that we are going to work with, yes.

Okay. And then finally, from us, I guess everyone saw the news yesterday, last night that NVIDIA is taking a stake in Nokia. And I guess this is kind of resonating well with what we're hearing from industry sources that you're expecting that these AI workloads for latency purposes have to move closer to the edge. So people are talking about like it seems with Nokia and NVIDIA today, you'll have AI workloads running basically wherever there is a base station. Could you talk a bit about the implications for your business if this is kind of -- could potentially drive a new refresh or CapEx cycle among telcos who have prior to yesterday, planned to cut CapEx rather than grow it?

Yes. So I mean, edge, AI, and that whole thing, I think, and I have to caveat here, I am not an expert at 5G, 6G technologies at all. But I think that from history and what we've seen over the years, 5G never really rolled out in the way that the big providers said it would. The importance of the applications that were talked about in 5G being predominantly low latency for real-time applications, slicing of the network, meaning quality of service, I mean, basically giving more priority to certain amounts of bandwidth for certain applications.

All of those things, I believe, that AI could be the thing and edge AI, in particular, that really unlocks that whole opportunity. It could be the reason why we will see 5G becoming what it was supposed to be and 6G rolling out over time. I would recommend you listen to Ericsson and Nokia. They probably have a stronger view on that, but that would be my 0.5. Meaning, yes, what is the consequence for us, of course, Christoffer? So that means more mobile backhaul services, a faster adaptation of 100 gigabit technology to the base station routers, meaning more business. So coming back to whatever growth is good for us.

We have a question on the portal as well from Daniel Albin. Are you able to scale up production with your EMS suppliers, or could that be a bottleneck?

No. Our EMS suppliers, I don't think will be a bottleneck. We are with Kitron right now. It works really well for us. There are many alternatives if we, for some reason, would exhaust that relationship. So yes, moving around between the different EMS is absolutely feasible. We have no plans to do it. Kitron works great for us. But they are not the lowest-cost player out there. So we'll see.

But for now, good, and I think Kitron is a great company. They have very good capacity. So that will work. What they do for us is things like circuit boards with standard components and mechanics, and all of that. Then we have our own production where we do the optical pieces of our products. I think we have great capacity in there, and we have ability to scale it way beyond where we are right now. So I'm not worried about that either. Of course, Stefan talked about our inventory. That is to a large extent, optical components with very long lead times. So I'm super happy that we are where we are now, having this inventory on stock that is more important than having a lot of cash right now to be able to support our growth. So no big concerns there, but certainly an area that we need to monitor.

Oystein Lodgaard from RB has also joined the call.

Good morning and congrats on the super strong results. A couple of questions. Starting with the gross margin. You're winning now, of course, large deals with large customers. Do you see that leading to some pressure on gross margins that you have to give away bigger volume discounts? Or do you think that you'll be able to maintain margins around the current levels?

If you buy the current levels, mean the range that we have been operating at for the past couple of years, then I would say, yes, absolutely. Are we offering better discounts to larger projects to win market share? Yes, absolutely. And it generally takes a while before we work back to the levels where we are now. But I would say in the broader perspective, I think the answer is yes. I would like to reiterate what Stefan said. If you compare Q2 and Q3, an important element of that is the tariff compensation, meaning when we charge tariff to our customers as a line item, for some customers, we have just lowered the discount or raised the price. But for some customers, it's worked better to charge tariffs as a line item. And we're seeing that we are simply better at that in Q3 than we are in Q2.

And you've quite, also I think, increased the range of your products also lately. If you can kind of now maybe discuss whether or not you are, you have products that are capable of doing kind of more long-haul type of projects. Does that kind of expand the addressable market for you? Do you see opportunities outside of kind of the core metro segments with these new products?

Yes. The answer is yes. And I think it's very relevant for the group of customers that I talked about, the regional operators in the U.S. So if you are, as for instance, building a network across Texas, you need high performance on the products, and we can offer that performance now. We are modeling networks that are spanning the northern peak of Scandinavia down to the southernmost peak of Scandinavia, that's 2,000-plus kilometers with 400 gig signals traversing our networks all optically with no problems.

So the performance of our products, which really started with our 34-degree ROADM technology a few years back, and now we've added things like Raman amplification to the product portfolio, the performance of our products is great at the moment. And yes, we can build a much bigger network. It is very much in line with what we have been talking about all along, expanding our addressable market.

Last question. Maybe this has been answered. I was a bit late to the call, but just thinking about costs going into 2026, can you say something? Do you expect to continue to invest at kind of the same level that you have done this year in the last couple of years into 2026? Or do you see kind of the scale benefits from the investments that you have made? Or how should we think around that?

I think you should continue to think about it in the way we've talked about it. Our clear ambition, target goal, whatever is to grow our revenue faster than we grow our OpEx. Having said that, and I think you also should factor in what level of efficiency we can achieve over the coming years on our tools development for internal use. But I think at the moment, not continuing to invest would be foolish. There is a great opportunity out there. It's going to be there for a very long time. So we will continue. Most recently, we've added two new sales teams in America, as an example. And I think that's the right strategy to continue now and to do a little bit more than what I probably would have said a year ago.

Okay. That was the last question.

Then thank you very much. Have a nice day, and welcome back in three months.