Smartoptics Group AS

OSE:SMOP

Earnings Call Analysis

Smartoptics Shows Signs of Recovery with Strategic Opportunities Ahead

In Q3 2024, Smartoptics reported revenues of $13 million, a 4.5% decline from the previous year but consistent with Q2 2024. Notably, order bookings improved by double digits, indicating positive momentum. Despite a stable gross margin at 47.4%, EBITDA fell to $1.1 million, leading to an 8.3% EBITDA margin, down from 19.8%. The company remains focused on its large account strategy, particularly with the WIN Technologies partnership, poised to enhance its market position. Looking ahead, management anticipates a turnaround in Q4 2024 and emphasizes ongoing investments to capitalize on the growing demand for bandwidth, especially in the AI sector.

Strong Signs of Improvement in Q3

During their Q3 earnings call, Smartoptics reported a revenue of $13 million, representing a 4.5% decline compared to the same period last year, although consistent with Q2 this year. This indicates a stabilization compared to earlier declines. Positive signs emerged from the order bookings, which saw double-digit growth year-over-year. Magnus Grenfeldt, CEO, emphasized that despite not achieving growth, the performance is considerably better than the first two quarters, positioning Q3 as potentially the start of a turnaround.

Shift to Software and Services

Smartoptics has noted an encouraging trend towards selling more software and service contracts, which typically carry high profit margins. This is reflected in an increase in deferred revenue from $5.7 million to $7.5 million year-over-year. This transition indicates a strategic pivot towards higher-margin offerings, underscoring the company’s long-term profitability outlook.

Improvement in Key Markets

The EMEA region has seen a resurgence, with three out of four subregions performing strongly. In Q3, Smartoptics noted significant activity levels in EMEA, coupled with an increase in sales driven by new partnerships, particularly with WIN Technologies. This positioning is expected to strengthen the company’s competitive edge in the regional networks. Despite a slowdown in the U.S. market this quarter, the CEO remains optimistic about a longer-term rebound.

Continued Investment for Future Growth

Despite current challenges, Smartoptics is committed to investing in R&D and maintaining a disciplined approach to recruitment. The workforce has grown from 108 to 124 employees primarily in R&D, indicating a focus on innovation and readiness for future demands. Smartoptics aims to prepare for growth in 2025, with an expectation of improved operational margins as initiatives unfold.

Operational Performance Metrics

The EBITDA margin has notably decreased from 19.8% to 8.3%, aligning with increased operating expenses due to staffing and project commitments. However, the company's operating cash flow remains strong at $5.6 million. The stable gross margin at 47.4% compared to 50% last year suggests resilience in product pricing despite fluctuations in volume and revenue.

Growth Drivers: The Role of AI and Partnerships

Smartoptics anticipates growth stemming from the increasing demand for bandwidth spurred by AI applications. The partnership with WIN Technologies is considered a significant strategic achievement, with potential long-term implications for network modernization across a broad geographical area. The company is also pursuing opportunities with regional carriers and emerging markets, reflecting a diversified approach to growth.

Outlook and Guidance

Looking forward, Smartoptics anticipates a gradual recovery in Q4 and beyond, contingent on the successful execution of current projects. Although no specific revenue guidance was provided, the company is optimistic about achieving growth targets in the medium term, especially with the new product developments expected to be launched by Q4. Both industry trends and internal strategies suggest that Smartoptics is on a trajectory that should lead to improved financial performance in the upcoming quarters.

Earnings Call Transcript 2024-Q3

[Magnus Grenfeldt, executive]

Good morning, and welcome to Hotel Continental, Oslo and Smartoptics' Q3 2024 financial presentation. A warm welcome also to you who are following us online. So quarter 3, winter is coming, and I'm absolutely okay with that, and my intention is to tell you why. That's not normally the case in my life. So we are reporting a quarter that I'm actually quite pleased with, Q3 with clear signs of improvements. We're coming out from a challenging market that has been with us for a number of quarters.

As you know, those of you who have been following us. We are also reporting -- announcing today a significant achievement within our large account strategy. The quarterly number, $13 million in revenue. Why do I have reasons to feel good about that? Well, there are a couple of things here that are difficult for you to read maybe. So if we look at quarter 3 versus quarter 3 last year, we actually do a lot more business within the quarter. It's in the order of 15% more business within the quarter. So Q3 last year was the last quarter where we had signs of longer lead times from previous problems we had with component shortages and stuff. So a higher backlog moving into that quarter compared to this quarter, so more business within the quarter.

Order booking is something that we generally don't talk about as a number, we use it from time to time to show -- to indicate signs of something. And I can tell you that the order booking is higher this quarter compared to the same quarter last year, which is also very good. Same sort of ballpark, but please bear in mind that order booking is -- we don't have the same quality in that data as we do in our other numbers, but safe to say that at least double-digit growth in order booking. So that's very positive.

Another positive thing is that comparing again to the third quarter of last year. We are selling more software and services, which results in -- we're putting money into our balance sheet into the deferred revenue, which is in reality for those of you who have been following us, deferred profit in the company or deferred EBITDA because it's a 100% margin. That's long term, very good. And last reason why I think this quarter is actually quite good is the fact that sequentially, Q2 to Q3, we are flat, and that is not the normal seasonality in our industry. So another good sign.

So when I read this, a little bit better than it looks from first glance. So clearly, things are improving. We're continuing to deliver gross margins above our long-term aspirations. EBITDA, EBIT, clearly below what we are aspiring in the long-run. We are continuing to invest. We still think that now is a very good time to continue the investment and continue to build for the growth that we see coming ahead. And over a long period of time, starting in Q4, as you see, I'm still saying that I expect a turnaround in the second half of the year and where we are right now, that means Q4.

So all-in-all, positive. Looking a little bit more long-term drivers for growth acceleration in our industry and specifically to Smartoptics. This is a slide and several of the arguments here we have been talking about now for the last 3 or 4 quarters. Clearly, the large account's strategy of the company, we see progress there with the WIN Technology's partnership that I will talk more about in a while, a very important new customer for us with lots of potential. And as you can see in the first bullet in the leftmost box, we have already followed that up with another achievement. It's an RFQ win with another INDATEL member, and you will see what INDATEL is within short. So clearly, a big achievement in Q3, and we're following that up already now, and that's something we will talk more about in the future.

The situation in our markets, it's very similar as it has been. The new thing and the big change is that we're seeing EMEA being at a very high activity level now. And we can also see that in the results in Q3 that EMEA is delivering very nicely. I would say that 2 out of our 3 -- sorry, 3 out of our 4 subregions in EMEA is performing really nicely. There is really only one that is still lagging behind. UK, Ireland is a little bit softer still compared to the [indiscernible].

Achieving good things in the large account strategy in this quarter with this particular partnership that we're announcing this morning, that is tightly associated with the products that we have been talking about for the last year, improving our competitiveness in the higher end of our target market, metro WDM, meaning the regional networks, meaning the more advanced networks in the market. And those products are the reason why we're winning. We have, in the year, developed and delivered product according to plan. We're continuing to sell our products before they are released, which is rare in our industry. And we're getting super good feedback on our software platforms from customers. That has now also reached a level where it is a very competitive product out there.

All this driven by the ever-growing demand for bandwidth that we have been talking about for -- well, ever since the introduction of the company. We have a new thing that is driving bandwidth now, AI, which is discussed in -- well, I would say, all over the place, how this will affect optical transport networks and the need to transfer data across geographies between data centers and so on and so forth and eventually to end customers. The way I see it is, is that this is kind of a 3-step phenomena happening where we have seen for a little over a year or more than that even, huge investments going into massive data centers where they build the clusters for training of the models, et cetera.

What we're coming to and what's going to be positive for us is, of course, AI moving into becoming a ubiquitous tool for the enterprise community. So more of the sort of cloud connect type services from the enterprise community and operator community into the major data centers. That's how we benefit from hyperscalers growing. Effectively, all our customers needs to connect to these data centers, building networks for that. In addition, as AI becomes kind of a standard tool in the enterprise community, we will see higher demands for data center to data center interconnect in the enterprise community, kind of Tier 2 cloud spaces as well, driving projects for us.

And last but not least, when these tools change from being text-based -- largely text-based tools that the general public is using into video production and more high-bandwidth applications, and we see 10 billion people around the planet starting to use this in a massive scale. Well, we're seeing yet another Netflix, YouTube, Facebook, whatever on top of the one we're already having. And I want to quote peers in the industry here that -- it's not a case where AI is taking over from the regular cloud business, the cloudification of everything. That is still growing at the same pace as it has in the past. So it's really on top of everything else that's happening. So long term, very positive trends for us.

I want to talk a little bit about the announcement from this morning, our new partnership with a U.S. regional operator called WIN Technologies with their headquarters in Wisconsin operating across a larger geographical area that you can see on this slide. To the left, you see how WIN describes their network on their homepage.

Just to put things into perspective, we are in the Nordics here today, in Norway to be precise. What are we talking about here in terms of geography, size of network, et cetera. So comparing population, population density, size of the geography, et cetera, this is effectively similar to a pan-Nordic network. So it is a very big network that they are operating with a wide range of services running across it. I mean the obvious one is to service their 31 independent ISPs and telephone companies with bandwidth for all their purposes. In addition to that, there is a lot of mobile backhaul, hundreds of base stations in this network that WIN is servicing, IT services across the geography, enterprise services, and well, data center interconnect services, a wide range of services delivered across this network.

What are they using us for and what will they use us for going forward? Well, it's to extend the network, to build new customer connections with 100-gig, 400-gig products that we offer. It's to build -- to expand the ROADM footprint and the footprint of this network as they continue to grow. And perhaps most importantly, it is we are there to help them in their modernization of this network, which is kind of common for a lot of the operators that you will see on the next slide that the infrastructure has been there for a very long time, 10-plus years, 15-plus years. The ever-growing demand for bandwidth is kind of forcing them to adopt new technologies, to modernize the network, to cope with these new technologies, to put in more bandwidth, and they are at that time now. So a large need to roll out new modern technology to replace old generations of optical transport equipment. So clearly, a very large opportunity for Smartoptics that's going to be with us for a very long time too.

A little bit of education on WIN and how they sit in the U.S. market. So what I'm talking about here is something called INDATEL. That is a consortium of regional network players around -- well, there are a few states who doesn't have a WIN member, but most states have something similar to WIN. And through INDATEL, you can do things like buy connectivity from the East Coast to the West Coast. They are present in over 1,000 [ pulps ] across America to deliver those type of services in competition with the Tier 1s in the U.S. So clearly, an alternative to Tier 1s and Tier 2s in the U.S. And of course, as I said, many operators with similar demands, similar networks and similar footprints, some a little bit smaller, some a little bit larger.

So the other player that I talked about us winning an RFQ for a project is one of the other operators on this map. And we have a few more customers on this map where we have, over the years, sold equipment in smaller scale where the potential is still to come. So they have chosen Smartoptics, I would say, to a large extent, based on our products, based on the new products, based on what we can do with them, but also our place in the industry. We have been talking about the gap argument, the need for a challenger in our market, the need for midsized companies to service these midsized players. They describe themselves as a midsized player. I don't think if we were in the Nordics, someone who was operating a pan-Nordic network would say that they are a midsized player, they would say that they are probably the largest of them all. But still, there is a need for challengers servicing this industry and Smartoptics is spot on in my opinion and apparently in the customers' opinion, as you can see here.

So very positive. I've talked about the long-term and more mid-term growth drivers for the company. I want to give you an additional update on another initiative that we have been touching upon for the past year just by saying our intention is to put a little bit more focus on our optical devices business. So you can see in the bottom right corner of this slide, how we have been developing this business in the period 2021 through to 2023.

It is a good business. We are making money. We're taking that money or have been taking that money over the years to reinvest into the more advanced products and into our softwares and platforms and into the services we deliver. So effectively taking the money, investing it in the red and green on in these bars. What we haven't done to a large extent is to focus on growth in the optical device business.

I think, as I've said many times before, these 2 product areas or 3 product areas really, they belong together. They are closely associated in the sense that we are selling the products to the same type of customers. It is similar technologies, of course, the same technologies, fiber optics and high-speed data transfer and all of that. The business models, however, are a little bit different, where the device play is more of a volume game through a large partner network, where the solution software and services is more project-oriented or yes, solution sales type of business, also indirect and direct, so also utilizing our vast partner networks for that piece of the business.

What are we going to do here? Well, so number 1 is investing in really leveraging the 15-plus years we have as a leader on the technical side in sense of know-how of how to develop things like production environment, coding solutions, software for customers to be able to configure and program these devices for their needs. We have really been a leader there. So continue to invest and invest a little bit more into that to modernize our tools, modernize our platforms, focus on strategic sourcing, which is a very important piece of this game to have the right underlying suppliers, manufacturers for the technology that we are then altering to make into sellable products for us.

So those 2 things are obvious, but then also enhance the focus in the market. And what we have done recently here is to do some changes in the management team that will become effective very shortly, where we're introducing now a dedicated product area with a dedicated leadership to focus on this business area. We will see over the coming year or so how we then continue to develop that. So we should view this as on top of the other growth drivers, we're also putting a little bit more effort into this nice business where there is a lot of untapped potential.

I will now move into a deep dive of Q4, a couple of slides before I hand over to Stefan to take you through the financials in more detail. And we do -- like we always do, we start with the geographical aspect of the business. Clearly, the positive sign here is EMEA. EMEA is back. As I said earlier, that's very nice. And also looking forward, we're seeing nice projects, nice big accounts that we are in conversations with. So very positive to see EMEA coming back. Also some strategic efforts that we have done in APAC this year, having more people in the region. We have also employed our first proper employee out there in Malaysia to support our customers.

And we're seeing those type of investments paying off with a second quarter in a row with pretty good numbers out of -- coming out of APAC, even though not huge numbers, but still showing the potential. And we're seeing APAC changing a little bit also going forward. We're seeing more hyperscale-related investments going into APAC and certain regions in APAC, the corridor from, yes, Indonesia, Malaysia, Singapore and similar, where there's a lot of data center activity and hyperscaler activity, which is leading to the need for cloud connect services, as I discussed earlier, where some Chinese vendors are not as welcome as they have been in the past. So that sort of phenomenon that we've seen in Europe and the U.S. over several years is now also starting to affect the APAC region, which is, of course, positive for us.

So the U.S. is declining a little bit this quarter. Every time I show this slide, I've told you guys that please don't overanalyze this slide. It is a lot of coincidences in which market is growing one quarter to another. It's simply a too short time period to draw any conclusions. The only thing I can say is that I'm not worried at all about the U.S. I think over the long term here, we have 2 very important markets, U.S. and EMEA. And my belief is that Americas will quickly come back and dominate this picture again.

From a product standpoint, if we bundle together the solutions, software and services, those are product areas that belong closely together. We can see that we are almost flat there, a little bit down on solutions and a lot up on software and services. So no big drama there. A little bit of a drop on devices here, which is what's happening in the U.S. So some of what we saw in the quarter where U.S. was declining, an unproportional large part of that is due to drop in devices. And devices is a more fast-moving market. So I'm confident that we will be back. We haven't done any major changes to our partner network or anything like that.

Stefan, I will hand over to you to take us through the balance sheet and working capital.

[Stefan Karlsson, executive]

Thank you, Magnus. I'm happy to share some numbers and data with you. We have a strong balance sheet with an equity ratio of 59% compared to 62% last year. Noncurrent assets is $7.7 million compared to $6.8 million last year and consists of capitalized development expenses, tangible assets, leases and deferred tax assets. Our current assets has increased to $30.6 million from $29.5 million, and it is mainly inventory and trade receivables at similar levels.

Our cash is $9.0 million compared to $7.8 million last year, and it has increased from $5.1 million in June. So we have had operating activities generating $5.6 million this quarter compared to $5.5 million last year. So strong cash quarter. We have another available credit facilities of $7.1 million. that is nonutilized. Noncurrent liabilities amounts to $1.2 million compared to $2.5 million last year, which is lease liabilities of $0.8 million and favorable loans of $0.4 million.

Current liabilities, excluding deferred revenue amounts to $10.6 million compared to $8.5 million last year. It's mainly trade payables, tax liabilities and personnel-related expenses. Both trade payables and current liabilities has increased since last year. Deferred revenue amounts to $7.5 million compared to $5.7 million last year. Increase is related to larger revenue share from business area, software and services.

The working capital amounts to $13.3 million compared to $16.0 million last year. Inventory has increased to $14.6 million from $13.0 million. And here, we see shorter lead times from our suppliers as well as we have commitments to our customers in the forecast period -- in the forward periods, which makes us having this level of inventory. But we are still working constantly with the inventory levels. Trade receivables has decreased to $14.7 million, down from $15.6 million last year and $17.2 million last quarter. And we have had very good collections in the quarter. And the long-term trend we see is that we have later invoicing in the quarter, and that has pushed up the levels of AR, but now we are trying to work them down, and we have no losses and we have them in good control.

Trade payables are on $4.2 million compared to $3.3 million last year. And the increase is mainly related to timing of when invoices are falling due, so no special effect there. Net other short-term liabilities increased to $11.8 million compared to $9.2 million last year and is related to increase in deferred revenue that was $7.5 million compared to $5.7 million last year, and tax liabilities increased to $3.3 million from $2.5 million.

If we look on the financial performance, we see revenue that declined 4.5% to $13 million from $13.6 million, but it's still on par with Q2 this year, which is very good. And normally, we see a seasonality effect, as Magnus mentioned, whereas Q3 normally is weaker than Q2. We have a stable gross margin of 47.4% compared to 50% last year. OpEx is stable around $5.1 million per quarter throughout Q1 to Q3 '24. We have lower employee cost in Q3 based on vacation, and we have higher marketing activities in the quarter, driving up other operating expenses a little bit.

We have an acceptable EBITDA on $1.1 million compared to $2.7 million last year, and the reduction of $1.6 million is spread out on lower revenue and margin drop, providing a drop of $0.6 million and $1.0 million is related to increased OpEx levels, and that is driven by organizational growth and conversion of consultants to employees. We have our employees that has grown, the average number for the quarter from 108 last year to 124 this year. And the main increase is related to R&D. As a result, we see the EBITDA margin on 8.3% compared to 19.8% last year.

The operating cash flow is positive and is as strong as last year with $5.6 million plus compared to $5.5 million last year. We have lower revenue last year, but are profitable. Trade receivable trend in '23 to '24, where we have higher sales, as I said, later in the quarter that has built up AR, and we are trying to push it down by -- and have done it by good collections in Q3. Inventory slightly increased, but stable and monitored.

Thank you. Back to you, Magnus.

[Magnus Grenfeldt, executive]

Thank you very much. So looking ahead, and this slide has been with us for a very long time now since 2021. And I will talk about it in exactly the same way that I have talked about it in the past 3 to 4 quarters. We are still aspiring to achieve our goals in all of these metrics.

What I said last time I presented here was that 2025, of course, it can happen. There are opportunities out there, and we are working on projects that potentially could take us there already in 2025. But I think that would be -- we would need quite a bit of good fortune and luck to achieve that. So -- and there is nothing out there that is kind of changing that statement. So we are continuing to work towards these targets. And yes, hope to achieve them.

That's it for today. Let's see if we have any questions. Yes, one in the room. Thank you.

[Unknown Analyst]

[indiscernible], SEB. Just a quick question. So you're still expecting a turnaround in the second half but will you say that the Q3 that you have experienced now is a part of that turnaround or are you expecting to see a shift now into Q4?

[Magnus Grenfeldt, executive]

Kind of a poetic question, I think. Is it the beginning or is it already there? I mean, there are very, very good things happening in Q3. I mean, clearly, is it the big turnaround that I have been waiting for? No, it's not because we are not growing. It is still minus 4%. It is considerably better than Q1 and Q2. I think we should see it as the beginning of something good.

[Unknown Analyst]

And one question on the WIN agreement. So how different is it in scale and potential value from what you have done or larger projects and solutions that you have done in the past to give some feeling of the potential size?

[Magnus Grenfeldt, executive]

You think things like we've done with Crown Castle and such?

[Unknown Analyst]

Yes.

[Magnus Grenfeldt, executive]

I mean, overall, the potential in this particular case is way higher than what we have done so far with, for instance, Crown Castle. On the other hand, the timing is -- I mean, you do not -- you don't take a network like this and say, I'm going to modernize it and you have it done within 1 quarter. That would be a very, very, very good quarter for us if that happens. But there's a lot of planning and a lot of work that needs to be done in preparation for this. So the way I see it, it's going to be kind of a top customer for us over many years to come now, assuming we perform, of course, which is our intention. So yes -- so certainly on par with the biggest projects that we have ever done.

[Unknown Analyst]

And last question on kind of investment. So you have increased your staff with new resources. So how do you see balancing investments versus cost control growth going forward? Do you have a plan you will follow kind of irrespective of what happens on new projects? Or do you have some leeway?

[Magnus Grenfeldt, executive]

We will not follow regardless of what happens. And in fact, we look at this not every day, but certainly every week, where are we in relation to where we want to be? Can we afford it? Should we do it? Also looking at the sum of opportunities, many of them having elements of new products that we need to alter or tweak or develop new features on a product to win a particular deal, et cetera. So it's a complicated puzzle that we need to lay. But the way I think to answer it is that we are very far from doing any cost cuts or anything like that. So will we continue at the pace we have done right now? Well, we'll see. We'll probably bring on a few more employees through Q4 here to prepare for next year to build -- continue to build the team. It's not going to be anything dramatic over it. And hopefully, as we see growth pick up, we can be a little bit more bold. But I'd like to -- I think we use the expression, disciplined investments, and I like to think that we are kind of disciplined in that area, disciplined, but taking the risks that we need to take to catch growth.

No more questions in the room, so I will read down the list here.

So we have a question here. You noted in Q2 that you had received a first pilot order from a global cloud operator with presence in 800 data centers. How has this relationship progressed in Q3? And are you expecting to see any commercial orders?

The relationship is slowly progressing. We are in discussion related to new projects. And yes, I am expecting to see new commercial orders, but I can't really give you any promises related to that at this point, but it looks positive, absolutely.

Next question. We have seen some big operators -- big network operators like Lumen Technologies signing multibillion U.S. dollar deals with hyperscalers like Microsoft and Meta to facilitate bandwidth for AI traffic. Are you seeing any signs that Smartoptics will be able to participate in the AI opportunity at any of the Tier 1s or Tier 2 network operators?

Well, we have talked about the Tier 1 community over the years as something that we don't necessarily put focus on at this development stage of our company. For sure, we are meeting them, talking to them, but it's difficult to break into a Tier 1. So in our world, we don't really have a lack of customers to go after. It's more the other way around, particularly when we talk about our bigger accounts that we need to carefully select where we invest even there, given the win probability and the product fit and the willingness to innovate and many parameters like that.

So I would say, yes, in some years, absolutely niche applications within Tier 1s is absolutely a possibility. Tier 2s, yes, sure. And Tier 3s, absolutely. And there is kind of a range of -- like the one we talked about in the previous question, a range of new kind of start -- more start-up-oriented operators, global ones, with very attractive product offering, very software-driven offering, providing these type of services. And that's an area where the previous customer that we talked about belong, and it's also a focus area for us. So yes, AI traffic will certainly be positive for us in several customer categories.

Another question, are you the sole source on WIN?

For the applications that we're talking about now and to my knowledge, we are the sole source. Larger operators like this, there is always a legacy. There are always many suppliers in the mix, providing all sorts of different technologies. So yes, but for the applications that we're talking about now and to my knowledge, yes.

Right. So then why is the gross margin down to around 47.5% for 2 quarters in a row versus 50% in the previous quarters?

Well, so I think -- I mean, there isn't one reason for this. There are probably several, and we haven't quite had the time to analyze in detail. As long as we are kind of operating at this level, I'm not too worried about it, and I don't put too much focus on it. Would we drop down towards 45%, I would see that as a much, much bigger problem. I think it's elements of us being more aggressive, us being more focused on larger accounts. That's one thing. We're selling more software service contracts now versus hardware, meaning we have kind of a margin being put on our balance sheet to some extent and so on. So there are several reasons for it. Nothing that worries me to a very large extent, although I realize that it's an important question.

Next question, as you continue to ramp up FTEs, are you also pushing -- phasing out some external consultants during Q4? You are also pushing out some external consultants. What should we expect in terms of OpEx growth in 2025 versus 2024?

I would like to come back to that, Stefan, right? It's a little bit too early to talk about OpEx growth in 2025. We are coming in to doing that work now after Q3. It's related to the budget for next year and so on. So we would like to postpone the answer to that question.

Can you say something about the development so far with the 2 large customers you announced previously this year?

Yes, I did answer that question, and it's a similar situation with both of them. Those 2 were kind of first wins, a project coming in, delivering equipment for particular applications. And then we are kind of coming back into business development mode again, starting to discuss which applications do you want to use us for, where and when and so on. So no major achievements in those 2 to date, but certainly continued progress in the dialogues. So yes.

Big projects or customers that should have a positive impact on Q4 or should we just assume normal seasonal improvement from Q3 to Q4?

I mean there are, of course, bigger projects that we are working on that could land in Q4. We shall see. Timing is the most difficult thing that we work with. But yes, there are such projects that potentially are there in Q4.

There's a lot of questions here. There is one question related to our product roadmap. Have you released most of the products that that we talked about and can you talk about the road map for next year?

We are on track. We have released the most important elements of what we have referred to as our new products in 2024. There are still a couple of add-on products that we are releasing now in October and December, but largely on track. And my suggestion would be that we do kind of a rundown on the product road map for next year when we present our Q4 result. That's a better timing from my standpoint.

All right. Do we have any other questions that are not the same? There is a question related to the growth in the different segments.

Well, I think our focus right now is to get back to growth as the overall organization. That's the key focus. That growth is going to be driven by solutions, software and services as all growth in the past several years. I'm expecting that we will start to see positive impact on the optical device business, hopefully sometime mid next year or towards the end of next year. It is a smaller part of our revenue, so it's not material, but the sooner, the better we can get that going. And I'm very hopeful with the new recruitment and the new organization that we have in place that, that should happen.

All right. I think we have covered the questions on the portal. So many thanks for taking the time to listen to us, and see you soon. Bye-bye.