Careium AB (publ)

STO:CARE

Earnings Call Transcript 2024-Q1

[Operator]

Technology-enabled care company, Careium this morning published their report for the first quarter of 2024. Will they bounce back from the somewhat slower growth in Q4. Let's see what they have to say. Christian Walen, CEO; and Matthias Carlsson, CFO. Welcome.

[Christian Walen, executive]

Thank you so much. Great to be here for kicking off the year in relation to the markets. As you can tell, we are quite happy comment on your question there regarding the bounce back of the resounding yes, not to the level that we wanted, but definitely indicative of us moving in our planned direction.

And look forward to be able to some more clarity on the quarter and the start of the year.

[Operator]

I also want to remind of viewers that you are able to ask your questions in the live chat. And with that, please, Christian and Matthias go ahead with your presentation, and I will be back for the Q&A.

[Christian Walen, executive]

Thank you. I'm just waiting there. I got it on my screen. So it seems to be up. So again, sort warm welcome to the first quarter of 2024 for us at Careium. I am as stated Christian Walen, CEO and President of Careium and with me is my fantastic colleague, Matthias Carlsson, my CFO. So let's let of the quarter if we can slide ahead. So first off, to the question that I think the most people were wondering, yes, we are delivering growth stable solid profitability and positive cash flows as we kick off the year.

More on that in detail when we talk on our markets to understand a little bit better. Second, what I want to highlight is that our development in what we call other markets, that is DACH and France reached over 80% compared to the same period of last year in terms of the net sales which I think is absolutely phenomenal. It speaks volumes about the changes in our strategy and resource allocation and the fact that we are now very, very serious about these huge European markets where we previously might not have been as active.

And last but not least, the quarter was the first quarter where in our latest product, this mobile social alarm, known as the Ab which is 4 seniors who are on the go out and about a fantastic product with innovation, everything from 2-way communication, data in regards to geo fancy and GPS positioning fall sensors and so on. And it has actually for its first quarter in the market, been our highest selling product in the history of the company.

We've never seen a product having this type of reception from our customers, which is absolutely fantastic. So with those highlights to the next slide and the sales and gross margin. So [indiscernible] of 2024, we increased overall organic growth with about 0.6% compared to the same period in 2023. Adjusted for currency effects, this amounts to about 7.7%. The total sales delivered for the first quarter was SEK 210 million compared to SEK 194 million in the same period last year. Service sales were SEK 155 million, up from SEK 142 million compared to last year, which is reflective of an increase of about 8%.

For product sales, we delivered SEK 55.8 million compared to last year's SEK 51.6 million in the first quarter of 2023. So this corresponds to an increase of 8.1%. We kicked off the quarter with a gross margin of 42.9% compared to 38.5% in the same period of last year. The reason for this is, of course, the steering of the product mix, which means that we are focusing on driving sales around products that might have and also efficiency in our services organization, which we are constantly driving towards.

And with that, we took our markets. And starting out our business in the Nordics. So it says increased by 8.9% compared to the same period of 2023. The service sales were growing at 11.4% compared to same period in last year and this is driven both by new customers and [ contracts ] and some temporary prolongations, which are gradually decreasing. The increase in gross margin for the Nordics was mainly done to efficiencies in our operation, and this concerns everything from being smart about our resourcing, implementing AI-based [indiscernible] systems for resource planning and so on.

If we move to the U.K., which has probably been for a lot of the people following us, one of the bigger questions. The sales decreased 0.1% compared to the same period in 2023. However, the service sales increased by 2.9%. And what is most important is, as you know, ever since October, we've had a strong headwind on some conclusion from the U.K. government in regard to the transition from analog to digital, effectively closing down the old PSD and infrastructure in favor of it.

And when the U.K. government announced that there would be a new deal in terms of what the time line would be we effectively saw a really, really strong challenge to our product sales. That persisted all the way [indiscernible] at which point the U.K.'s government came up with timeline, which was clarified. And as soon as that was in place for February and March, we saw sales normalized, more or less overnight. So it's very clear that, that was the main effect.

And the impact of the changes that are sort of in place now is effectively that the grace period for this transition is extended by one year. So instead of closing down on the last of December 2024, it now closes down the last December of 2025. So moving on, we can go to the next slide and we visit our colleagues in the Netherlands. [ Crude ] delivered a quarter 1 for 2024 increasing sales with 9.2% compared to the same period in last year in '23. This is both by pricing driven by price increases and adding more customers and connections into the business. Gross margin was improved to 61.5% in the first quarter of '24 compared to 58.6% million in the first quarter of '23.

Now as some of the pipe following us, we have a slightly different operating model, which is explaining why we have such strong gross margins in the Netherlands compared to other markets, simply because of idiosyncratic factors of how the Netherlands market works. And as I've already mentioned, in what we call other markets, that is predominantly in Germany and France, we saw sales increased 80.1% compared to the first quarter of 2023. This is really a testament to our great keys in these markets.

It is also a testament to how well our product portfolio fits where these countries are in terms of their response and uptake to modern innovative products in the sector and so on. So clearly, we're very happy about that, also good with the slight gross margin increase, which is predominantly driven by the sales mix. And with that, we move on to profitability. So EBITDA amounted to SEK [indiscernible] in the first quarter of 2024.

Same period last year was SEK 25.4 million. For the first quarter of 2024, up at 16.6% compared to the same period last year, where it landed at 13.1% billion. The EBIT delivered was SEK 19.1 million for the first quarter of '24, which is markedly improved from the same period last year where it landed at 7.3% so this corresponds to an EBIT margin of 9.1% for the first quarter in '24 and at the same period in '23 it was at 3.8%.

And this is, of course, reflective of our efforts to get more efficient, implement market processes, better systems and thus being able to drive quite substantial cost takeouts. Also more sales, more new contracts and so on that contributes is. And with that, we'll move on to the next slide on cash flow.

And the cash flow from current activities for the first quarter of '21 amounted to SEK 32.9 million which is compared to last year's same period where it was at [ 37.9%. ] And I will comment a little bit on what seems like a negative decrease. But in my view, it is actually not Free cash flow for the first quarter landed at SEK 16.6 million compared to the same period last year, where it was at SEK 28.2 million.

So for many of those reading the report or watching this webcast, you would think, well, this isn't such a great development. But I think the important part here is to look at both the fourth quarter of '23 and the first quarter of '21 because right in the midst of those and those of them are impacted by the Chinese New Year, which is effectively a 1-month loan more or less close down of production in China.

You need to plan around this in a very, very smart way to manage your working capital. And if we talk per how we did last year. So the comparable period with Q4 '22 and Q1 '23 compared to where we are now, we can see that today, Q4 and Q1 '24, we actually have a free cash flow of SEK 52.4 million and if we compare that to the same period in the previous year, we were 25.2 million. So in my view, I don't see this as a bad outcome, but rather the opposite.

It is very much a result of hard work, good integration between finance and supply chain and so on. So total cash was at SEK 46.4 million at the end of the first quarter for 24 million compared to EUR 53 million in period 3. The bank overdraft facility at the end of the first quarter, so SEK 15 million compared to SEK 28.3 million in 2023.

Our net debt amounted to SEK 182.5 million for the first quarter of EUR 24 million compared to the same period last year where it was at EUR 223.5 million so with that, let's move to the summary and outlook for what's to come. And as mentioned, in spite of this slight challenges to the U.K. in January, we are very happy with the normalization and the growth that we delivered in relation to sales.

Really solid profitability that we're proud of and a positive cash flow all of them highlights to us. Second, we have the really great development in DACH and France, which we are very proud of. Now let's remember, Germany is by far the largest country in Europe in terms of people. And France is a very, very good second there together with the U.K. So really important markets for us for the future.

And I would like to highlight again this really, really good. Are you can see anything docking station. A really impressive to see thousands and thousands of units fly off the shelf to [indiscernible] where we were barely able to accommodate all customer requests. This is really positive, not just for the sales of this product, but for the entire category of mobile and social alarms, there's a lot of innovation to be done here.

The fact that you can get into these form factors that are suitable people who are perhaps an earlier stage or as if the traditional fixed alarm is the best solution for them. we also believe that looking somewhat to the future, these products are absolutely essential for anything related to retail covers for the business-to-consumer segment in which we are also a player in some of our markets.

So in terms of the challenges, I don't think any company dependent on freights have been not been impacted by the fact that the Swiss Canal situation is having an effect on us. We are definitely trying to be as smart as we can in regards to the balancing of air freight versus shipping. We do prefer shipping, but the time lines have been extended quite a lot due to the situation there, and it is hard to manage.

And sometimes that leads to customers actually not equipment. But it is a global challenge, and we generally hope to be able to solve it, of course, as well as we can. And looking ahead, our focus will be to be a key player in this major transition that is ongoing, infrastructure closing down in the Nordics, 2G and 3G. U.K. with its new time line. The rumblings have started in France, where they have a target date for 2030 in terms of when they closed down their analog -- analog infrastructure.

And that process has taken sort of more center stage in the discussions in France. So we are really, really keen on being a part of that. Of course, we also need to up our activity in developing both hardware and software to be able to release some really, really interesting news in quarter since we are hard at work across both of these categories in shaping what will be the innovation and technology platform that carrier is for the EU ecosystem.

Lastly, we want to comment on the guidance where we conclude that we have not attained the full 12% to 15% for the first quarter. However, our guidance is for the full year and we retain it, both in relation to the sales development and growth, but equally also the increase in profitability. And with that, we conclude the presentation and move into the questions.

[Operator]

Christian and Matthias. And we will start off actually passing the word over to equity analysts from ABG Sundal Collier, Ales Beer, could you please go ahead with your questions.

[Unknown Analyst]

I'll jump right into the top line. So top line growth was better than last quarter. But as you said, it's still affected by the delay in the U.K. Could you maybe quantify or expand a bit on how much of that growth was affected by the day in the U.K.? And also just regarding the announced time line for ATD, when do you think that will see an effect on demand from that?

[Christian Walen, executive]

So first off, I'd argue that throughout the fourth quarter of '23, we impacted obviously, sales did not go down to 0 or anything like that. But we were maybe at 60%, 70% of what we expect it to be doing. And that is also, in part, what persisted into January. Now what the U.K. -- the U.K. situation is I mean it's really important for us, but we are doing a lot of things in other markets also. But the U.K. is the one technology-enabled care market in Europe.

And the reason being is that it's a very numerous population and the adoption levels of technology-enabled care, there are some 16% of people over 65. Compare that to Germany, for example, where the same figure would be around 5%. So obviously, the potential in Germany is huge, but the U.K. is the market to be in for the moment. So I'd argue that since the announcement in October, we've maybe been able to deliver 60%, 70% or so of the sales and what the government has stated is essentially that they are prolonging the period that authorities, B2B players and so on have available to them to make this transition is essentially one year longer.

So in our view, what we saw in February and March is effectively sales reverting to what we expected to be kind of a planned normal scenario. And we expect that to keep going. We also have some interesting wins in the U.K., both on services and hardware sales. And at the moment, when we look at our pipeline data for deals and opportunities, U.K. is actually one of the most active markets, so we can see that speed is picking up there. Now for a lot of the public side buyers in the U.K., they actually break their financial year in April so that means that there is always a little bit of a confusion around that April mark in terms of things can go either dramatically up or slightly down.

You never really know -- but so far, so good, we seem to be tracking towards more on what we planned or expected.

[Unknown Analyst]

All right. Great. And also on the organic growth, would you say that that's attributable mostly to price increases? Or is it mainly volumes? And also are you seeing any opportunities for price increases in the current connections that could be implemented like in the upcoming quarters? Or should we see opportunities for price increases, mainly on new contracts?

[Christian Walen, executive]

Well, price increases for us is a bit funny because normally, you would expect them to take precedence from sort of the break of the year, right? But that is not the case in our industry. So some are -- see they are contract driven to a large extent. And that means that they can happen sort of a little bit spread out all over the year. So in terms of what is attributable to price increases, we would say that, well, not so much in terms of the organic growth just for the first quarter.

Over the span of the full year, of course, it's reasonable to assume with some kind of indexes, which again might be very different in different markets. So it will impact a little bit differently. However, it is not one big effect that comes into play during the first quarter and the break of the year. That is not our situation.

So it's an ongoing thing for us, I think price increases are twofold because one part of it is, course, the increased price, which are usually regulated for the contracts, what you can do and what you can. The other side is, of course, that we are much more dynamic on our cost -- and that means that we can sometimes drive down cost. We can switch out some components to the hardware, for example, which can have quite a substantial unit impact or we can do things in our services side that could happen, in fact. So for us, it kind of goes both ways and how we can work with this. And thankfully, we have really good market leaders who are on this all the time. Is there an opportunity for us to increase prices? Yes, certainly. But a lot of what we do is, of course, regulated by long multiyear contracts. So they follow some kind of index and that is probably the more larger part of the basket of customers and contracts that follow that lock. All right. Great. Very helpful. And then just on the gross margin was obviously very positive this quarter. Was that mainly on the product mix? Or were there any one-offs? And how should we think about the gross margin going forward? Is this is a run rate? Or are you expecting it to come down a bit? SP1674448296 I would say that -- the gross margin was a decor a lot of things, of course. But I would say that the most important thing is that we had a good development in service delivery area. -- in markets would say. We didn't have as much problems with site as we could have from time to time when the flu season kicks in and so on, we had some issues with that in Q4, for example. But we have also -- we are also managing the service functions better and better all over the group. And then, of course, product mix has Well, both product mix and market mix a bit, you can say, because it is favorable for the group normally to have a lot of sales in other markets in Germany and France and so because we manage our often to have quite good margins on that For product sets. SP1674448296 And this is also down to -- I mean, we have a sort of innovation quality technology position in the eyes of our customers. And that means that in some markets who are perhaps long term, really good for us. But at present, the uptake on our type of solutions is probably quite low. -- even if that is where the world is heading. That means, of course, that we have a really good price position in these markets because we are seen as the sort of #1 most advanced, most capable kind of partner to work with. And whereas in other markets, such as the Nordics, for example, then it is a very high bar for technology. And of course, we don't have the same sort of innovation premium as we might have in other markets. And that is due to a ton of regulatory factors that you need to adapt to and so on that can see prices normalize a little bit. Maybe it means that some of our other competitors are operating at lower margins. But we are happy to do what we can. And I always think our gross margin will fluctuate a little bit. I don't think you can sort of consider it the run rate going forward, but there will always be things in terms of product mix, flu seasons and whatnot, but should we be in and around this area and try to constantly make it better for sure. All right. Great. So moving on to OpEx. We saw that both R&D and S&M picked up a bit. And also, I believe this is the sixth consecutive quarter with negative admin costs year-over-year. So just 2 questions on that. First, generally, how are you feeling about the operating leverage going forward in general? And specifically on admin costs, do you expect the decrease to continue? Or are you seeing a need for increasing the headcount in your future? I will I can answer both. I think. I mean we are a technology company. And that means that, of course, we -- I think we're doing it with really good teams and really good focus on doing the right things. I personally having had some experience, I don't believe in massive R&D organizations. I think that creates a lot of open inefficiencies I think it's much better to have high-level talent in small, very focused teams. But we actually do see now let's remember, we were in a quite different position about 1.5 years ago. And of course, you need to make some changes to accommodate for getting back to profit and whatnot. But where we are now, we see that the value of accelerating some of these hardware and software development is probably far greater than retaining some part of the percentage on the EBIT line in terms of how it drives the value of the company for our shareholders and so on. So we are going to up that a little bit. Now to what extent we're not going to be some crazy scale up running in the red right we're a listed company or also very focused on making or having a good profitability, but we definitely see we can get much better returns from investing more into our R&D -- and in relation to the administrative costs, I think this is 1 of the changes we have done.

We have actually gotten smarter about how we set ourselves up. Of course, that means a little bit of a cost takeout and so on. And it can also be done in certain markets where we are -- as we have communicated, really serious about integrating our business. And while we've come a long way, which explains some of this drop, we still have more to do.

And this is absolutely fantastic because Careium is a result of a sort of serial acquisition spree across a number of years and very low levels of integration. So for us, this is not just about freeing up resources to go to the bottom line. It's also a little bit of a lift and shift going on where we are allocating resources into the right places. -- and we expect this to continue because we are not happy until we are truly running as one sort of joint entity. And we have a little bit way to go. So there's a little bit more potential I wouldn't be super surprised if maybe the decrease on the admin side slows down a little bit, but we should not be looking at increasing it in any way, rather getting it to a very good level.

[Unknown Analyst]

Right. Great. Okay. So moving on to the EBIT. We touched on that, but obviously, a great EBIT increase compared to last year. which bodes well for your full year target. But how should we think about the EBIT margin going forward? Do you feel like this is more of a normalized EBIT? Or was there any positive one-off effects that we should take into account?

[Christian Walen, executive]

So always difficult to say what is the normal EBIT level.

But this quarter was not in any way heavily affected by any one-offs. So I would say that the EBIT will. The EBIT margin will very with sales a bit. Just the more -- the better the tougher top line, the better the EBIT margin.And I think we quite clearly state that there are no extraordinary impactful things going on for the first quarter. It's a fairly pure outcome, so to speak.

But I mean, you always want to be more profitable, right? But we have also been clear that our target for the year is to deliver better profitability than last year, but we have not communicated to what extent. And of course, for those who are living between the lines, that means that we see that we can do things with investments that are so value adding that we want to have the headroom to do them, but we will never allow profitability to be lower than it was last year. And of course, we want to deliver as strongly as we can, having both of this.

We want to have the cake in [indiscernible]

[Unknown Analyst]

Of course. Okay. Great. Just one final question. You spoke a bit in the presentation about the cash flow, which was obviously positive with a very modest change in working capital, which was maybe a bit surprising as you generally expect some inventory build up in Q1. Could you maybe expand some more about that and what drove this? And how we should think about the cash flow going forward?

[Mathias Carlsson, executive]

Well, I mean, we really, really worked hard throughout the quarter to manage this. And I mean this is managing the sales, managing all the planning for and forecasting for products and production and so on. So I think a lot of it is down to the fact that we've done a good job both in our commercial side and also in our supply chain and finance side to always keep tabs on this in a smart way. As for inventory buildup going forward, well, I think we are sort of settling around.

We have implemented some new processes for how we think about our stock, effectively having more of a clarified idea of how components, units in manufacturing, goods and transit, centralized warehouse in local warehouse, how it all comes together. As you know, during the late fall, early winter, we set up a dedicated supply chain office, which we did not have previously and the work coming out of those teams is really, really good in conjunction with finance and the commercial teams.

So we expect to do as well as we can. I can't say much more than that. but we also have a lot more hands brain and eyes on these processes, and that is what we can see delivering. So big inventory buildups, well, we'd rather avoid those. Now the reason for why we could possibly take off a little bit more stock is that for some of our markets with these transitions, it is quite hard to predict when a large volume very quickly needs to be made available to the customer.

So we're having a lot of discussions on what is sort of the safety stock level and it could potentially increase a little bit. Our aim, particularly with the Swiss Canal situation and so on, it's not to be fully just in time. That is probably dangerous, especially in our industry. So it could potentially increase a bit, but then will probably increase for the right reasons.

[Unknown Analyst]

All right. Great. I think that was it for me.

[Operator]

Okay. Thank you, Alice, ABG Sundal Collier. Great questions there. And Matthias, how are you affected by and how do you handle the volatility in currencies?

[Christian Walen, executive]

Now Matthias is happy. He loves this kind of question.

[Mathias Carlsson, executive]

Yes, you could say that for the product side, of our business, which is quite substantial. We source more or less everything from the East Asia then paying in the U.S. dollar. And as you can see, we are not present in the U.S. from a sales point of view. So we don't really have any inflow in dollars. So we always have FX risk when it comes to the U.S. dollar. And yes, this is something we keep an eye on all the time considering whether we should hedge or not and so on.

So it's an important factor. Of course, had a great effect on the gross margin in the end if the dollar would be more quickly would be much stronger towards -- especially towards the British [indiscernible] the Euro.

[Christian Walen, executive]

So I think as part of all the work we are doing, we have our strategy process also, which starts now in this period of time, and we do functional strategies and market strategies and overall strategies, of course, but the hedging issue is one of the top continuing issues for the finance hopefully, we'll come up with a really good format to work with and have updated our treasury policies and so on to be able to do this and have more flexibility. So Matthias will be sitting there on the FX platforms and monitoring of the futures in the [indiscernible].

[Operator]

Okay. Thank you. We'll keep Matthias in the hot seat here with a question from a viewer. What is your plan with the hybrid loan? Is it correct that you cannot pay dividends as long as you still have that loan?

[Mathias Carlsson, executive]

Yes, that's correct. You can say that we also cannot pay a dividend -- or we cannot pay the loan without permission from the main bank also. So we have this hybrid loan for how we see what will happen with it in the long run, of course, but it was a setup when we split out of the room. And there is no plans to do anything about it in the near future.

[Christian Walen, executive]

It's pretty favorable, though. And we don't foresee -- we have our AGM here today and so on, and it's not on the agenda to propose any dividends.

[Operator]

So Okay. Thank you. We will move on with 2 more questions from the viewers. And the first one is how large is the addressable market for your offering in other markets. Can you give some more info on what your offering is in these other markets? And where do you see the largest potential?

[Mathias Carlsson, executive]

That's an extremely good question. So in terms of the addressable market, it's a little bit hard to make assessments on that. There is an industry report that we take a lot of information from and we also contribute to it. That comes out with some periodicity and the new version was just released. And across Europe, you would argue that for now, maybe it's around EUR 13 billion or something. Depends a little bit on how you cut and slice the market, right?

But what we do see in this other market, [indiscernible] France is that these are markets where surprise, surprise, the level of digitization is not so very high. In addition to this, the level of uptake for the percentage of the population who are getting access to these services is pretty low. So in Sweden, you'd have 9% of everyone over the age of 65, having these type of services and solutions, U.K. 16%, Germany, 5.5% France, 6% something like that. So what we see then is that given the amount of people and the demographics of this market is, this is where it will happen over time. Because there are so many people transitioning into these stages that we will probably see an uptick in adoption rates.

And I think a clever way of thinking about the addressable market is to take the overall market volumes and basically cut it back based on the population, current adoption rates and make some kind of projection of what is, can be assumed to happen. And the reason for why you can do that is that these systems, aside from maybe the private pay side, they are quite slow to change.

So the reimbursement system for Germans or the reimbursement system for these services for Sweden, they are probably not going to see dramatic change since a lot of it is down to other care system works and how it is funded. So in our view, we would argue that we would probably see over time Germany, France, these country is coming up to the level of some of these other markets, probably landing at around the 10% adoption rate and given that there's, what, 89 million people in Germany, that, of course, means that quite a substantial portion of those would be part of that addressable market.

Now since pricing levels and so on are quite different, then that's also something that models the view a little bit on what market is the one to go for. But if you make things really, really simple, you could argue that while we are very strong in the Nordics, which is fantastic. It allows us to have a very, very high level of innovation because that's what you need to be a player in the Nordics, where it will really happen is the U.K. France, Spain and Germany.

Those are the giants of technology-enabled care in Europe. So as to how larger part of those EUR 13 billion that would go into those markets, I would say that, that is well more than half of that, so to speak. And or many other potential markets in the European landscape, we feel that 85% of total spend is in the markets where we are at present.

So we are not super keen to go on to an adventure to Greece or Portugal because we feel that there is so much to do, where we currently have our basis, where we are doing great work, where we're really appreciated by customers and end users. So we will probably keep tracking on that for the foreseeable future.

[Operator]

Okay. And how do you look at mergers and acquisitions currently? Do you plan to go into new markets as a full service provider? Or are you mainly looking to -- at expanding existing markets?

[Mathias Carlsson, executive]

I think that's a very good question. We note that if we compare the situation to one year ago, there was absolutely no structural movements within our markets. So no acquisitions being done. Everything was extremely stable. And if we fast forward from 12 months back to today, things are heating up quite considerably, really huge deals announced just 2 days ago, lots of changes in different markets and also across the European landscape.

And I mean our view is very clear. If we go back to the very notion of of why carrying was spun out of [indiscernible] The idea there was that this is a super fragmented landscape all over the you could do great work in continuously in a programmatic manner during acquisitions. That was one of the core hypothesis of why the spin-off was relevant. Now since I came in and we as a management team and our Board, we've been very clear on saying that a lot of the Careium [indiscernible] have stemmed from the lack of integration. So we bought a bunch of companies that did the same thing, but we did not make them play well together, and that does cost us a lot of money.

So we've been extremely busy getting everything on the same platform, same systems and good balance between central and local and so on. And as we've communicated many, many times, we've said that once we feel confident that we have integrated and elevated our business to the level where we can take on a new company and within 6 to 9 months dramatically improve its profitability, that we will start our M&A activity.

And when that time comes, we're pretty happy with how we're progressing on the integration front. Still some bites to do, but overall, some really, really good developments there. So we are definitely keeping our eyes on what's going on in the industry, what opportunities we have, but we have nothing ready to communicate in any way.

[Operator]

Right. Okay. And you -- what would you say are the key factors that made your mobile social alarm Abby performing so well?

[Mathias Carlsson, executive]

Well, I think it's about the end user because you reversed the clock 10 years, you would find that a lot of the seniors who got access to these types of technologies. They were in a state where they are probably not so much outside of the home, they would go shopping, meet some friends have a lot of visits, of course, but then the fixed alarm was probably the best solution because it could also connect some other sensors or important pieces of information.

What we're seeing now is that people are healthier, longer, but they are still at an increased risk. So that puts a huge demand on the need for these mobile solutions which also are not limited to just doing the same thing as the fixed alone, but in a sort of carry about kind of form factor. This is also fully integrated with the corresponding app so that France family and those invited in the cash circle can be more active in being closer to the senior and knowing if things are deviating based on whatever information is imputed.

This is also a super important aspect of how we see care systems developing over time where we want to bring seniors and their near and dear ones even closer because that would be a survival factor with the strain put on Careium systems. I think the category of mobile social alarms is something that has been around for some time. But to be very honest, a lot of the products in the category, they have been extremely basic.

And this is a very, very powerful device that can do a lot of things, communicating with IoT back end to connect sensors. It can involve for instant family and the care around the individual weekend geofence area, so we can trigger a lot of automation on alarms and so on. If we see behavior that is moving out of what is to be expected or could signal that there is an issue.

So it's a very, very intelligent piece of technology that has a lot of benefits for the users. So I think that is the reason. It is -- we had one of our partners in France who did an extremely thorough evaluation of all the mobile systems on the market before opting what to go for and the Abby came out on the absolute top in their evaluation because it's just a really, really smart feature-rich end user-centric device. And that is how we do our development.

Our R&D teams are extremely committed to understanding what does it mean for an individual at that stage of age in terms of how they live their life, what they need, how they want to in terms of privacy and everything, how they want to be engaged with and so on. And I think we just hit the sweet spot with [indiscernible]

[Operator]

Okay. And another important product you state in the report that you surpassed 100,000 units installed of your Ellis family 4G hub. How will this number increase? And how does it affect your profitability?

[Christian Walen, executive]

Well, I mean, we see that the Ellis has a lot of life in it still. I mean, it builds on the notion that it sits at the center of an ecosystem around an individual where you can integrate sensors and radar IR, what have you, there is a plethora of real smart solutions from super advanced smoke detectors to plugs, but the tech changes in behavior based on electricity usage and whatnot and the Elisa is the foundation for making all that information meaningful.

Now what does it mean to have an installed base within this family of 100,000? Well, for us, it means that what we can do over-the-air updates and everything that means we can add functionalities for example. We can also do things like add on new technologies that are software-based. And we can also actually do things even if we would require a visit that could possibly change its physical capabilities. So we see it as an installed base that we can offer greater value around.

And hopefully, that is something that we will be able to capitalize a bit on. Now an important part here is also going back to the dedicated supply chain that products are never a fixed thing. There is a constant work in switching out components, optimizing and a lot of that is driven by cost down, of course. So just the fact that we have so many units out in the field.

It also has an impact on future below material costs and whatnot because we can, of course, drive the prices down on the unit somewhat. So get some better scale economies there.

[Operator]

Okay. Thank you. And that was all my questions for you today. So Matthias and Christian, thank you so much. Thank you, both of you.

[Christian Walen, executive]

Really good also to all the involved people who sent in some really good questions. Maybe that goes for many companies, but I take a lot of calls e-mails, [ LinkdIn ] messages from shareholders out there, really smart questions. We really want to be a company who is there for our shareholders. So please keep doing that. We really appreciate it. Thank you.

[Operator]

And this show will be back in 3 months. See you then.