Xplora Technologies AS
OSE:XPLRA
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Earnings Call Analysis
Summary
Q3-2023
In a challenging market, the company displayed remarkable resilience with a 41% revenue increase year-over-year to NOK 134 million. This was propelled by a successful launch of three new products and an impressive 23% growth in watch sales. Recurring telco services revenue soared to NOK 56 million, marking a 30% growth with a high margin of 82%. Marketing efficiency improvements led to a 39% decrease in marketing expenses as a percentage of revenue, and a cost reduction contributed to a NOK 24 million improvement in EBITDA. Our cash position benefited from a strategic letter of credit arrangement, enhancing liquidity. We also achieved our connectivity target of 226,000 mobile subscriptions, surpassing the forecast by a substantial margin. Additionally, an increased average selling price of our products contributed to financial growth, and our annual recurring revenue (ARR) lifted by NOK 50 million within a year.
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All right. Welcome, everyone. We have to time it with our live streaming. So that's why we need to have the countdown.
Welcome, everyone, for our Q3 reporting. It's really nice to see how many people we are here today, accounting from our first quarterly report this year. We have been a lot more people live. And normally, we have plus 60, 70-plus joining live as well. So that's really good.
On behalf of the company as well as the management, we are really excited to present for you today. And for today's presentation, we have 4 members from the management joining and presenting. We are hoping to come through or run through the presentation roughly in 30 minutes or so, then we have Q&A at the end. Myself, Sten Kirkbak, CEO and Founder, I will take you through a quick intro. Then we have our new CFO, Knut Stålen, more than 30 years' experience from the industry also been in a lot publicly listed company. Really appreciate him joining the company. He will take us through the financials. Then our COO, Kjetil Fennefoss, will take us through some of the operational updates and there is a lot of them. And then Jason, our new Executive Vice President for our kids division will take you through some of the key takeaways from our watches, performance in both hardware and software. I will end with a road ahead and try to give you some indication of what to expect. And then we end with the Q&A.
All right. Without further ado, let's just jump into the numbers, and I will start with Q3. So this quarter, the last quarter. We had group revenue NOK 190 million, which is up 37% year-on-year, of which the revenue from our services arrived at NOK 56 million, up 30% year-on-year. And our really core focus this year to drive our subscription and service revenue, we ended with 226,000 subscriptions of which 194,000 came from our SIMs and 32,000 came from our new value-added service and premium services, which Jason will take you through some more in the details later.
Core focus this year to drive our gross profit ended up 45% to almost NOK 90 million. And one of the major accomplishment is our turnaround. We improved our EBITDA this quarter with NOK 24 million, arriving on NOK 8 million reported EBITDA. And also, we ended the quarter with NOK 117 million cash in the bank.
If we look at the year-to-date performance, we have had group revenue of NOK 477 million, up 48%. And 1 key takeaway is from our previous year. In total, we arrived at roughly NOK 500 million. Going out of Q3, we have almost performed the same here as full last year. And also total recurring services year-to-date arrived at NOK 150 million, which is up 35%. A total of gross profit, NOK 233 million, up 40%. And also, we would like to emphasize, the turnaround on the EBITDA improved by NOK 35 million to a total of reported NOK 22 million. Of course, cash balance ended at the same, NOK 117 million year-to-date.
Before moving forward, I would just like to use one page to emphasize some of the key takeaway, we told the market in our Capital Markets Day and also in the early reporting of this year. Some of the key success factors and the deliveries from us to the market would have 5 key focuses: One, and -- number one, focus on profitability this year, to make a turnaround from last year's negative NOK 33 million to a positive number this year, major priority for the company.
However, while still driving focus on profitability, we should also showcase growth that we could do that at the same time. And we set expectations around the market expectation, roughly a 15% CAGR. So the market, when we started this year for kids wearable, expected roughly a 15% growth, which we would like to beat.
Third focus is to move from the focus on hardware, to annualize recurring service revenue. It's no point to just grow hardware sales as long as we cannot drive increase of service revenue with high profit. To turn around to focus on ARR. And also, as Kjetil will take you through in a lot of details, how we manage to really drive down our cost in percentage of revenue both OpEx and focus, of course, also on the CapEx target, which we will come back to.
And potentially, the one with the biggest effect this year, we said we will say a lot more no, then we will say, yes. As a start-up, we try to do everything and say a lot of yes. This year, we would like to say as much as possible, no. Unless it's emphasize our key focus, [ 932 ] strategy, which is we went from 22 to 9 markets where we have SIM connectivity to drive service revenue. To finalize and launch our 3 new products and sell them if we can drive service revenue from our 2 price point with SIM basic and premium, which the team and Jason will come back to in a second.
And as my colleagues present, I would like you to particular pay attention to 5 topics as well. When we had our quarter 1 -- first quarter presentation, we try to emphasize the restructuring of the business from Q3 and Q4 last year, how we do that restructuring and implement our efficiency plan. That was some of the key takeaway in first quarter report. In our second quarter report, we tried to demonstrate, as we said, how we would improve our distribution strategy? How we now have finalized the MVNO setup to drive service revenue and to demonstrate the profitability in our business case.
In Q3, I would like you to pay particular attention to the breakthrough in 3 revenue-sharing model because previously, quite a lot of the volume actually 50% comes from telco sales, where we previously have had no service revenue. We have had a breakthrough and announced 3 revenue-sharing model with telcos, which Kjetil will take you through.
At the other presentation, we'll come back with some insight how the market is performing. And even in a declining and consumer tech market, we have managed significant growth. We have also managed 13% reduction in marketing and other OpEx. We'll review the details. And one thing that a lot of companies, tech company or anyone is selling to end consumer has struggled with this year, is to push the increased cost to the end consumer.
Normally, companies are reducing their own margin and are not able to transfer that cost to the end consumer. We will show you how we actually have managed that and improved our profitability in that regard. And it's really nice to end the quarter with an annualized recurring service revenue with very high margin on NOK 222 million. So some key takeaways you can pay attention to as my colleagues will take you through the details.
Now for the exciting part, the financials. Knut?
Q3 was another good quarter -- revenue quarter for Xplora with 37% revenue growth year-over-year. It's important to note that in Q2, we had a one-off revenue from the master distributor agreement. So as a result, Q3 stands out as the strongest revenue quarter. Xplora was listed in November 2020 and the Q3 2020 revenue number have increased 4x going from NOK 46 million to NOK 190 million in this quarter. The revenues are -- consist of device revenue and services revenue.
First, the device revenue. And as you can see, we have achieved a 23% year-to-date unit growth. And as you can see, we have consistently outperformed last year's device sales. The chart on the right shows when a customer for the first time activate their watch and Germany represents the largest market. I would also like to pay the -- see the focus on U.S. that has a good growth going from 2% in Q2 to now 5% in Q3. So it's a good growth there.
If you look at the services revenue, our subscription numbers have steadily grown every year for the past few years. But in 2023, the subscription have had the level up compared to previous years. And that has resulted in the -- an increase from NOK 46 million a year ago to NOK 56 million in this quarter. Norway represent the largest contributor to this service revenue number, and Sweden is a good number, too.
When you look at the P&L, we had total revenues in the quarter of NOK 190 million. That's up NOK 37 million and the device revenue ended on NOK 134 million, that's up 41% year-over-year. We have managed to increase our device revenue by selling more profitable products and therefore, also increase the ASP from NOK 780 to NOK 1,072 per device. This ASP is approximately at the same level as previous quarter. So we are in the good flow there.
If we look at the total operating expenses, we have total expenses in Q3 '23 million of NOK 78 million, that's payroll, marketing and other OpEx and compared to NOK 75 million in Q3 2022. Payroll in this quarter -- the payroll expense in this quarter includes also a noncash option cost of NOK 4 million. And in addition, we have in Q3, also started to make provision for the company-wide bonus program that we did not have last year.
Marketing was down 39% year-over-year. And as a percentage of revenue, it's going from 20% to 9%. EBITDA, as Sten said, was NOK 8 million, compared to minus NOK 16 million in Q3 2022, and that's an improvement of NOK 24 million. Amortization of the Xplora Mobile acquisition is still the major part of the line for depreciation and amortization of NOK 14 million in Q3 2023.
I'm not going to go through all the numbers here on the balance sheet but I will focus that we have increased the inventory with NOK 7 million in the quarter because we anticipate higher demand in Q4. And it's quite important for everyone to see how we manage cash and utilize the LC arrangement that Xplora implemented in Q4 2022. This is shown by the chart below there where we have -- in red, we have the cash. And in yellow, we have the net finance inventory. And in Q3, in the previous year, we had inventory and prepaid goods that was on a very high level. And Xplora have a letter of credit arrangement at that time.
During Q4 and Q3, our cash reserve reached there absolutely lowest points. However, by implementing our LC arrangement, we have successfully then freed up cash previously locked into inventory, and this result in a much more flexible cash position. If you look at the development in the cash flow for the quarter, we started the quarter with NOK 99 million in the bank. We increased working capital with NOK 3 million CapEx, we spent NOK 7 million in CapEx year-to-date is NOK 18 million. And the change in debt is mostly due to LC financing of paid goods not received. So we actually increased our cash reserves, cash position in Q3 from NOK 99 million to NOK 117 million.
Kjetil?
So good morning, everyone. I'll take us through 4 different operational success factors that we set for this year. You will recall that we last year set up 5 new MVNOs. And this year, the focus has been on launching their [ operations ] and monetize on them. The second area is we did the piloting of the premium activity platform last year. And this year, I will show you the figures on how we have monetized and taken up the customer acquisition on that part as well.
We also said that we would explore the telco revenue share model and also manage an OpEx reduction in percent of revenue. I think each of those are quite ambitious targets initially, and I'll take you through one by one, how we have succeeded doing that.
We expanded from 4 markets, meaning from the Nordics to 9 markets last year. And we partnered up with the leading telcos in order to give the very best customer experience for our subscriber, meaning network quality and speed.
Yes. 2023, we have then launched these in the various markets, and we have been scaling up the sales. So we ended Q3 at 189,000 mobile subscriptions with a net growth year-over-year of 42,000. 21,000 subscriptions came from outside of the Nordic and we increased the recurring revenue from the services to NOK 56 million, another 30% growth year-over-year. And we continue to maintain the exceptional high margin from our telco services at 82%.
The premium service, I'm very proud of that from our company side. I think this is an area where telcos have been talking about monetizing on value-added services for many, many years, but it had still to be proven that it could succeed. And we have now launched the activity platform, starting really monetizing on the sales and also with the effect that the ARPU increase is in the range of NOK 25 as a result of this.
So we sell the service, either bundled together with the mobile subscription plan but also stand-alone through the Xplora app meaning that we can address all customers who have bought the smartwatch also through, for instance, at telco. And we have a 20% to 30% conversion rate on the mobile subscriptions, meaning that customers they opt in for the premium version of the mobile subscription plan that we have.
We now have the service available in all markets, including the U.S., but in the U.S., so far only through our app. We also deliver increasing ARPU on the time -- over time. This is for exactly the same period since we went when we listed the company back in Q3 2020. And we have increased it from NOK 80 to NOK 94 per month and this is the 4-quarter rolling ARPU that you see here. And we have used different pricing techniques to achieve this. What I call smart price plans where we have the choice on the activation page for the customer to opt in for the premium, which proves a 30% -- 20% to 30% conversion rate. And we also have done country-specific price adjustments. And in comparison to, let's say, regular telcos, which very often show a flat or a declining ARPU, we have been able to grow our ARPU steadily over this period.
The telco revenue share model, I think, is very unique. I recall back in the days when Apple launched the iPhone, the visited more or less all telcos around the globe and asked for a revenue share. Of course, all of them said no. We've managed to do that. We have now 3 telco revenue shares. The latest one we announced is Troomi in the U.S. if you go to Troomi web page, you will see that our products are now live there as well.
So previously, we -- when we sold products to telcos, we had roughly NOK 300 as a onetime smartwatch margin, only on the smartwatch and nothing more. Today, over the lifetime of the customer relationship, we earn NOK 1,500, 5x as much, and we build a recurring revenue base also from this new revenue stream.
We were, of course, a bit indifferent when we did this because we were afraid it would hurt our own sales. But luckily it proves to be the way around. There was a massive campaign from OneCall during back-to-school period, which also lifted our brand -- friends and brand presence in the market, and also contributed to an increase of our own sales in the same period.
When it comes to the cost efficiency program, cutting costs in absolute terms and as a percentage of revenue is tough with a company that grows opens new markets. But we have managed to do so. We have proven in the quarter compared to last year. Absolute cost reduction from other OpEx or OpEx excluding personnel costs because of this onetime offset of NOK 8 million, and in relation to the revenue, a 14-percentage point reduction.
We have conducted several individual programs where we have looked into all our other OpEx, and there are roughly 25 different cost items where we have taken action and reduce the cost for NOK 158,000 to NOK 3 million per item. And we have also been able to improve our marketing efficiency with a NOK 9 million no absolute cost reduction compared to same quarter last year.
When I sum up, I think each of these activities are quite large, individually, but we have delivered on them. So we have set up 5 new telco operations contributing to very strong Q3 net growth. We have a record high number of mobile subscriptions with 189,000. And we have proven that we can also successfully launch and sell the value-added services with 32,000 and we have got the first 5,000 subscription on the telco revenue share model. And also on top of that done an OpEx optimization from 37% to 14% of the revenue. That concludes my part.
Jason?
Good morning. So let me start by just reminding everybody, if you're not aware or just sharing the key strategy for this year. We were introducing 3 new products this year. We're going to capitalize on the MVNO market that we -- Kjetil kind of shared in the previous slides. And we were going to concentrate on the basic and premium same models we have.
So where did that leave us this year or this quarter should I say [indiscernible] ? Q3 generated NOK 134 million comparison to year '22, NOK 95 million. That's an increase of 41%. Using our new products, as you can see on the screen, the average selling price has increased as well. And 89% of the new generation of our watches for this year has actually contributed to that revenue. Also, just for inflation, we are now on [ 322 ] this year to date on watch sales itself, which was an increase of 23% year-on-year.
The connectivity, this has been interesting and exciting part this year and something I'm really, really happy to share some figures with you today. We started the year with a target of 175,000 for the year. We reported in Q2 that we'd reached and surpassed that to 189,000. So we challenged ourselves to business to increase our target to 220,000 for the year. At the end of Q3, we've actually reached 226,000, so we've beat that target as well. Of that, 32,000 are now premium subscribers, so they are paying the higher level of service for us, giving us a good margin on our products, which does then mean our annual return in revenue is now at NOK 222 million and 82% of that is gross margin, which is a very important piece of information compared to 2022, that was NOK 172 million.
Winning customers is tough. In my opinion, keeping them is a lot bloody hard, to be honest, if I can put it that way. But there are some figures on screen for you. We now have 1.2 million watches sold in excess of that effect. 1.8 million of those are actually app accounts that we have with our customers. 575,000 kids are actually using the watch monthly. Nearly 9 million people in September sent a message through our chat services. 68 billion steps are created. And of those 68 billion steps, our premium kids are actually walking more step on average 6,000 more per month. Thank you very much.
All right. Thank you, everyone, from the team. Now let's try to look ahead what to expect. That's always also difficult part. Before moving into that, actually, the status quo when we ended Q3 moving into Q4, and I would like to just summarize these 3 topics, which I think is very important.
We entered into Q4 with NOK 117 million cash in the bank. But also we have -- to take into account, we have a net inventory value on top of that of NOK 69 million. So if you take all our current inventory, as the team explained and you add everything we have paid but inventory is still not received minus the debt, the financing part of it, that's a net additional value of NOK 69 million as well. So quite a strong position in that regard.
As Jason just told you, we are now starting with a NOK 222 million annualized recurring revenue service base, meaning that every month, we step into our office and switch on the light on the start of each month, NOK 18.5 million with 82% margin lands on our account for that month growing. It means, in fact, to Jason's point, that we have increased in only 1 year, NOK 50 million in ARR in one year, NOK 50 million increase on that base, which I think is quite strong. We have managed EBITDA turnaround NOK 35 million to NOK 22 million reported now. And in a declining market, we have seen a significant growth. That's a status quo when we now enter into Q4.
I have to say also, I'm pretty proud of this Slide. Hence, I would like to share it with you because it paints a picture of what's going on in the market. What we are doing is one thing But actually, what is happening in general? It's always good to know. And also, I have to say, this is a snapshot of one market, although it's the biggest market in Europe. It's from Germany. And it's Q3 and it's 1 month, but I think it's worth mentioning as well. The source for this is from GFK. So one of the leading provider of insight and data because it's based on actual transitions and sales from distributors to retailers.
And I almost find it mind blowing that in September, and remember this, this is not the kids watch category. This is the whole wearable category with everyone included, Apple and Samsung and Fitbit, and all the usual suspects, everyone. And the brand that sold the second most product of everyone was Xplora. The #2 most selling brand in the whole wearable category in September in Germany was Xplora. You can see on the list on the color over there, just beaten by Apple and Apple has a lot of different model that accumulates to a lot of sales. Moving from #5 in March, which we thought was this will never happen again. Now we're #2. When we started the company, would never even imagine this.
Until we flip to Page 2, where we actually saw so what is the most selling product in a whole wearable category in September in Germany. As Jason said, we just launched our X6Play, the most selling product of everyone in the whole wearable category was X6Play. And we hate to brag but if this was a podium, not only would we be #1 but we would also have the third place with our new XGO3.
So the best-selling product in the whole category and the third selling product in the whole category, by Apples and Samsungs and Fitbits and everyone. Yes, we were quite proud.
And then in general, throughout September year-on-year, the end consumer wearable tech market, has declined 26% because end consumer has less money to spend due to interest gasoline, everything we feel every day -- every single day. So it has declined. And we have just showcased the 48% growth. We had a bold statement because we got it from all the investors when this year started.
So will you also decline? And we barely dare to say, we think that the kids smartwatch category can be a little bit more resilient because we still would like to protect and give products to your kids. And it seems, that's still the case. And we hope that will continue as well. Just wanted to share this is official data but it paints a picture of the category and the opportunity and the job we have done as well in context to the rest of the category.
So last page, the outlook, we continue to have the objective to beat the market. We have presented the results. As we said, we have already reached 226,000 subscriptions from the target 175,000. Kjetil went through all the details of cost reduction. And as the market has told us from January this year, it all boils down to the company that manage the cost. That's what we have managed, and we'll continue to focus on the profitability going into Q4 as well. And with purpose, we also disclosed that we are exploring significant opportunities in the time to come with in to new verticals, senior market as well as Software as a Service.
So with that, I'll ask Kjetil and Knut to join on stage and we can move into the Q&A session.
We'll do as we normally do, we'll start with some of the questions soon on the screen that we are -- have received from the online audience. And then we'll move into the questions from the audience. All right.
All right. So first, like that, either question coming in or we have them online. Yes, number one is about U.S., everyone is expect or would like to know about that. I think you addressed it a little bit. But question number one, how many units were activated in U.S. this quarter?
Kjetil ?
That was 6,000 units. So a strong quarter. I think the market -- the strongest growth in percentage. We -- also, as I said, we started the revenue share model with Trimix, so a lot of activities going on there.
Follow-up also on U.S. What about revenue? And when do we expect to break even in U.S.?
We had roughly NOK 6 million revenue in the quarter. Predictions to go breakeven during Q1 next year.
And that's -- yes. What was the revenue from premium services? Yes, we just had numbers. So Knut, what was the revenue from premium services estimated?
The premium revenue number for Q3 was NOK 3 million, still as a good starting point.
Yes. All right. Okay. This one is also good. How long does the company have a euro and U.S. hedge?
Knut?
That's quite important also for us to make sure that we have a good balance between our cost of the watches in the U.S. and sales in U.S. dollar and the selling that we do in euro. So we are hedging the currency until end of this year as of now. And we continue to evaluate how we move this forward.
One here. Nice results. I guess 2024 will be awesome.
Yes. Thanks. That's a good one.
What is the current user demographic and how many users are over a 8?
That's also a good one. Actually, if you take the complete average, that year still is roughly 7.2 and 51%, 52% is girls. Our core market or demographic is still somewhere around 7 to 9, where we have the core volume but we also do see volumes outside both of [indiscernible]. Our target group is 4 to 11, the majority is 7 to 9.
All right. How many units do you expect to sell in Q4?
Yes, we cannot disclose that. We'll do that when we present the Q4 number. But I think one very important takeaway is that what we have tried to work really hard on or take one step back, when we listed in the first couple of years, there were very little sales in Q1, a little bit more in Q2 and basically everything was in Q4. It was very difficult for us to calculate and even more difficult for the market to make any assessment because everything came basically in Q4.
So we have worked very hard to try to balance that a little more. And what we see now with the increase of retailer distributors and also more insights and visibility in the number. We try to get as much as bubble sale in Q2 for summer, in Q3 for Christmas. So most likely, we expect Q4 to be a much more similar to Q3 for that purpose. The rest will report when it comes.
You have sold 100,000 watches this quarter and 200,000 subscriptions. Can you open up a little bit more?
Let me rephrase and Kjetil, maybe you can tell a little bit that we basically have had all revenue from the Nordic in subscription so far and basically launched in Q2 for the rest of the world, but flavored that.
Yes. No, to be precise. We have, as you saw 189,000 mobile subscriptions and 226,000 subscriptions in total. So we have to, let's say, differentiate between sales of watches with or without subscriptions and the subscriber base. So it's not a comparable.
All right. I think that was the key questions online. We have a microphone. Questions from the audience.
[indiscernible] ABG. First, to start on the gross margin. The gross margin for devices was lower than at least I had anticipated this quarter at 30%. Can you explain what are the reasons for that started to make effects -- mix effects? And how should we think about that going into Q4 and 2024?
It's not a huge difference between this quarter and previous quarters. So it's -- I think if you should calculate anything, you should use the same levels as we have had now on the gross margins.
And also I would add priority on increasing the ASP in terms of absolute number versus only percentages as well.
So with that answer, can we -- should we assume that there is a mix effect here more -- selling more expensive watches means also lower margin on those watches.
In terms of percentage versus actual NOK, which is what pays our bills.
Yes. And also, you stated on one of the previous questions that you will try to even sales out more throughout the year. Q4 should be more similar to Q3. Two follow-up questions on that first. Are you then talking about device sales? Because I guess, recurring revenue will continue to grow, of course. And also, this quarter, you managed to grow 2% on -- there's units on very tough comparables from Q3 last year. Q4, you're facing easier comparables. Should we still, despite that, expect Q4 unit sales to be more in line with Q3?
So we split between units and services, and you can announce it services afterward. Yes, when I compare it to more stable, similar to Q3 this year but our overall growth. That's correct.
And to your point, the service will continue to grow, but you can...
Yes. I can elaborate a little bit on that. Let's say, Q3 has very strong months. It's very stable, high stable selling period. Q4, we have October, November, the sales in November result in -- it's very often Christmas gift. So we get the activations on the subscriptions in December. That means that we will get 1 month revenue from the increase -- the net increase. So it's not fully comparable to Q3 but we will continue to grow in terms of subscriptions, and we expect to see a slight increase on the revenue side as well.
Last question. On the slide you showed with the sales in Germany, very impressive, by the way. Congratulations with that. We didn't see the comparable numbers for July and August. They seem very strong. How do they compare to those months last year?
I think we have established -- to answer perhaps a little in general in that one. We have opened up a much wider distribution in Germany. We have added on both Telefonica and Vodafone, have all the 3 major telcos. Obviously, did a [ media market ] in Germany last week, and we see also that we are getting a much better footprint in there. So we are still not broaden, I think the distribution even further but we expect to continue the growth in the existing sales channels. And we have a much more stable sales in Germany now than we previously had, where we were very dependent on Deutsche Telekom. And now we have a much wider distribution churn rate.
All right. Any other questions?
Yes. You have said that you will consider to release monthly sales figures and also multi-subscription phase every month. How do you stand there? Do you want to do that or...
Yes. And yes, we are still considering to -- we just need to find a format that make most sense for the market. We are more confident now. And that's also one of the points that has been important for us to have our stability on the quarters because we had a quite big change on the different volumes. But more likely so to share on the development of the services versus the sales in units because that can still be a lot more variation between both months particular and even quarters. But we are still assessing to really good format on the services on a more frequent level, yes.
But why is it a problem if it's volatility?
Now it's not technically a problem but we have now introduced new services. We have also -- we all -- we just launched all our value-added services plus the 5 new markets in Q2. And really, we have only seen an effect of 1 quarter. So that's why we just have made an assessment that we'll have a proper format and have some stability on the number and then to explore what is the format and the frequency to present it. And also the fact that we just now have increased the third service revenue stream from the revenue-sharing model with the telcos. But we are working on it, and we will most likely also have a format to share.
So when will that happen?
I don't know as of right now.
I recognize that you had a significant increase in the sales in the U.S. Could you elaborate a little bit more on what sort of platforms that has come and the geographical areas and so on. And do you expect that to sort of continue with the same role?
We see that roughly 50% of the sales is on Amazon and 50% is in the retail channels. Amazon is, of course, a very strong platform in the U.S. We also recognize that we have 6,000 new subscriptions in Q3. So it's definitely going in the right direction. But there are still waiting for -- to launch our MVNO operation in the U.S. Just to inform about that as well, since there is no specific question on it so far that we have now achieved the so-called PTCRB certificate for the U.S., which is the formal approval that we are compliant with the product. And we are now in the second phase of the so-called homologation process with AT&T, the network that we have signed up the MVNO agreement with.
And as soon as we have that concluded, we will proceed to launch our MVNO set up or operating in the U.S. So we have had a contract in place for a while, and we have just held back on the finalization and launch of it. I think when we have that in place we will be in a position to have an even better margin in the U.S., and we can accelerate the sales effort in that market.
All right. I think that was it for questions. The management and Xplora team will be here for a little bit more time. So feel free to join us and also shoot some questions when we go offline. Otherwise, it was a huge thank to everyone being here as well as everyone joining online. Thanks.