Dustin Group AB

STO:DUST

Earnings Call Transcript 2021-Q3

[Operator]

Hello, and welcome to Dustin Group Q3 2021. [Operator Instructions] Just to remind you, this conference call is being recorded.Today, I'm pleased to present CEO, Thomas Ekman. Please go ahead with your meeting.

[Thomas Ekman, President & CEO]

Thank you. Thank you. Good morning, everyone, and most welcome to our third quarter call presentation today. We hope you're all well and have a good morning so far. Here on our side of the call is myself, Thomas Ekman; and we have Johan Karlsson, CFO; and Fredrik Sätterström, Head of IR, also in the room here as well.So today, we present our third quarter results for our fiscal year 2021. And we are continuing to navigating ourselves on our different markets through the current conditions. And I also want to emphasize here too that I'm very proud of our achievements and everyone is asking for their strong contribution in helping and supporting our customers and continues to enable our customers to stay in the forefront, especially now also when the hard work also shows up in the numbers.As previously announced and as you know, we acquired Centralpoint in the quarter -- in the Benelux during the quarter, and that is a transformative move for us, and it will enable us to step up to the next level. We closed that transaction on June 3. While Centralpoint numbers are not within our Q3 numbers, but we will, however, come back later on in the presentation today with an update.But first, though, let us go through the quarter. And moving on then to Slide #2 for financial highlights to see how we are improving and performing now during Q3. We have strengthened our position in the market and reported an organic sales growth of 5.1% for the third quarter. Our productivity and strong position in the value chain benefited our performance in the market, which has been impacted by component shortages and supply chain disruptions due to the pandemic.This, in combination, though, with intense cost focus resulted in our adjusted EBITA increasing by nearly 50% and the EBITA margin strengthening to 4.7%. And in addition, our online core business performed strongly in pace with a higher share of online retail and a greater need for mobility and cloud services and security, driven from underlying strong trends.I mean, the different market shares that we have been -- that we build our strategy on the online shift, the growth mobility, cloud services, demand for predictable IT costs, focus on security and integrity and last, but not least, of course, sustainability, have continued to be strong and increase in important during the quarter. And that, of course, makes our long-term position even stronger.Net sales was -- were at nearly SEK 3.4 billion, up 3.8% versus last year. The organic growth, as I said, was 5.1%, of which SMB showed a very positive 14.5% growth. LCP at a negative 2.6% and B2C at a positive 6.5%. So overall, strong organic growth for primarily SMB, and a small decline as a consequence of the shortage for LCP with delayed deliveries, but with continued strong demand.Gross profit was SEK 557 million compared to last year's SEK 493 million, giving us a gross margin at 16.4%, up from last year's 15.1%. And as said earlier, our adjusted EBITA increased with nearly 50% and came in at SEK 158 million versus last year's SEK 106 million, and that gave us the adjusted EBITA margin at 4.7% for the quarter versus last year's 3.2%.So strong performance and strong earnings. The margin improved by good performance and the structural changes we are doing, combined with good cost control within all segments. Both SMB and LCP show good progress in margin uptake. And consequently, EBIT was up to SEK 114 million compared to last year's SEK 52 million, and items affecting comparability was negative SEK 20.8 million.Then cash flow from operating activities was minus SEK 93 million compared to last year's SEK 468 million. We will come back later on in the presentation to describe the changes in working capital and cash flow. And EPS, earnings per share, was SEK 0.85 (sic) [ SEK 0.89 ] per share versus last year's SEK 0.35. Our leverage at 2.1 versus 2.5 last year in the lower part of our leverage target, which is between 2 and 3 of EBITDA.And a part, of course, from an intense quarter from an operational perspective, we have, as previously announced, acquired Centralpoint in the Benelux and more on that later on.Now Johan, you can take us through the financials in our different segments.

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. Thank you, Thomas. Moving to Slide 3 and the SMB segment in some more detail. So sales for the quarter ended at SEK 1.571 billion, an increase of 13.3% over last year, and as Thomas said, represents an organic growth of 14.5%.Sales growth continues to improve quarter-over-quarter despite challenges in the global supply chain. As in Q2, we saw good sales development in the hardware categories from all customer groups in the segment. However, compared to last quarter where the small customers were driving the growth, we also saw mid and large customer groups in SMB performing well. Recurring sales from services is continuing to recover after last year's negative effects from the pandemic, and grew by 6.3% in the quarter to an annual sales rate of SEK 856 million.For project-related services, the quarter started slow, but momentum has gradually improved during the quarter. Geographically, we saw good growth coming from all markets, but Norway, Sweden and Finland in particular.Segment margin for the quarter was 10.2% compared to last year's 7.8%. The main reason for the good margins was higher volume growth with shortages in the market, strong sales of private label products and effects from cost-efficiency initiatives. This was, as in the last 4 quarters, somewhat offset by lower sales of high-margin project-related services.The share of software and services was 21.4%, down from 23.7% last year and 21.6% in Q2, mainly due to the strong hardware sales. In total, segment results ended at SEK 161 million compared to last year's SEK 109 million, an increase of 48%. Segment margin of 10.2% was 2.4 percentage points higher than Q3 last year. All in all, a very strong quarter for SMB, both in regards to sales and margins.Moving on to Slide 4 and LCP. Sales in LCP was SEK 1.660 billion in the quarter, a decrease of 4%, of which 2.6% was organic. During the quarter, we saw continued positive signs in the corporate customer group, where sales continues to recover, while the public customer group was affected both by component shortage and delivery issues.Our current view is that the long-lead times will remain for some quarters, but that we have seen the worst of it, and it will gradually improve back to normal. Geographically, we saw strong sales in Finland and Sweden, while larger contracts in Denmark and Norway were affected negatively.Segment margin ended at 6.6% compared to last year's 5.9%. The increase over last year is mainly explained by generally margins in some of the larger contracts, improved sales to larger corporate and effects from last year's cost-efficiency activities. Segment results improved from last year's SEK 102 million to SEK 110 million or by 7.2%. This was especially positive as we have seen the issues with hardware availability.Moving to Slide 5 and the B2C segment. B2C had a very strong quarter from a profit perspective. Sales increased by 5.4% from SEK 155 million last year to SEK 163 million this year. Of the growth, 6.5% was organic. The main reason for the sales increase was strong underlying demand of computer hardware and accessories. The segment margin was up from 7.7% last year to a record high 9.1% this year. Good product mix and high prices due to the supply shortage contributed to the group margin.Moving on to Slide 6 and net working capital. Net working capital was negative SEK 293 million compared to last year's negative SEK 530 million. Last year was highly affected by the extreme situation in the beginning of the pandemic, where we focused on securing working capital to mitigate potential risks in customer payments. This year, the customer situation is more stable while the supply situation is more challenging. During the quarter, we have continued to use our strength in the value chain to get good terms with customers and suppliers. However, more focused on getting products delivered on time and in full than prolonging credit terms.Looking at the details, we see that inventory has increased in the quarter to SEK 607 million compared to last year's SEK 537 million. The main reason for the increase was higher purchase volume to reduce the risk with shortages of components. Accounts receivables was up SEK 120 million, mainly as a result of higher business volumes.Moving on to accounts payable, which was SEK 281 million lower than last year, mainly due to the actions taken last year as a result of the beginning of the pandemic. In total, we continue to see strong performance in the area of working capital, where we have now shifted focus from -- shifted focus to support good margins by opportunistic sourcing rather than prolonging payment terms.Leverage at the end of Q3, as Thomas mentioned, was at 2.1, where our target is to stay in the range of 2 to 3. The main reason for the increase compared to Q2, where leverage was 2.0, the increase in working capital compensated by the operating cash flow.Moving on to Slide 7 and cash flow and investments. Our cash flow for the quarter was negative SEK 167 million compared to SEK 334 million last year. If we look at the different parts, we see that cash flow from operating activities before change in net working capital was positive SEK 136 million compared to last year's SEK 109 million.While change in net working capital this quarter was negative SEK 228 million compared to SEK 359 million positive last year, the main difference being the decrease in accounts payable and increase in inventory this year.Cash flow from investing activities was negative SEK 24 million compared to last year's negative SEK 96 million, where last year was affected by acquisition. Cash flow from financing activities was negative SEK 50 million compared to negative SEK 38 million last year. This mainly consists of repayment of lease and rent liabilities.Moving on to investment. The total investment amounted to SEK 54 million compared to last year's SEK 125 million. CapEx related to IT development amounted to SEK 11 million, which was in line with last year. Investments in tangible and intangible assets decreased to SEK 18 million from SEK 94 million last year. And last year's numbers were affected by prolonged rental agreements.Investments in assets related to services -- to service delivery was SEK 26 million compared to last year's SEK 21 million. All in all, SEK 24 million out of the SEK 54 million in CapEx was affecting cash flow, the others were changes in lease or rent contracts.Moving back to Thomas.

[Thomas Ekman, President & CEO]

Good. Thank you, Johan. Then continuing over to Slide 8 and talk a little bit more about the acquisition of Centralpoint that also marks new chapter for Dustin. And I think looking at this graph, you can say that Dustin -- I think Dustin is a textbook example of how companies develop under different management and different ownerships. And if you look back here, we can say that we have had a founders phase from 1984, where mail order sales of B2B hardware and development also of the online platform already in 1995 with foreseeing founders who understood the beauty of a cost-efficient sales models towards many small companies.Then on to a second chapter, where we were in private equity ownership and expanding to new territories, new countries, we built our warehouse. We supported a lot of the development of the IT platform. Then listing at 2015, where we have clarified the strategy, continued growth, moving further only into services, developing ourselves or professionalizing ourselves, you can say.And then now taking next steps and starting to write our fourth chapter here within European expansion with the acquisition of Centralpoint, building up as a true multiregional player, with a strong foothold in the Nordics but as well as in the Benelux. And that is, of course, an exciting part going on here.And then continuing to Slide 9. Now when we pave the way to build our European IT powerhouse combining the Dustin and Centralpoint, we will be around 2,300 people in the company, a little bit more than SEK 20 billion in sales. If you take the last LTM numbers, also, if you look at the EBITA at around SEK 800 million, which is also from the LTM from last year. And then around 500 million -- 500,000 customers and making us the eighth largest EMEA IT partner reseller in our region of the world.And of course, as you know, being large in our industry is a good thing in terms of purchasing power, in terms of the influence of the whole value chain, driving both sustainability and, of course, profitability at scale. So this is exciting.And of course, now when we look into the -- combining the entities and combining the 2 companies, if we move on to Slide #10, we have set out an attractive value creation agenda to speed up the ability to achieve our long-term targets, where we will keep the strong momentum in the core LCP segment within Centralpoint. We realized sales and efficiency synergies to SEK 150 million annually on both local and group level.And we can also see that we can accelerate the growth of both in the Nordics and the Benelux through targeted capability transfers, both in SMB and in LCP. And of course, we continue to the roll-up expansion in Benelux based on our proven Nordic recipe.And the synergies here, they are expected in areas such as procurement, increased private label penetration, IT and technical platform, knowledge sharing, of course, and the SMB online operations. And those expected as we see them now and as we have estimated them and we can sort of continuously confirm them is that we expect annual sales and efficiency synergies of approximately SEK 150 million, and they should be fully implemented by 2023 and '24.And investments to extract those, it's around SEK 50 million, and those we are estimated to incur during next fiscal year '21-'22.We closed the deal, as said, on June 3. So now it's full speed ahead. And as a starting point of that, as you probably saw also last week, we announced a new organizational design on the leadership team level with 2 strong regions, running both operations and segments and efficient team of group functions with finance, HR and brands.And those 2 -- in those 2 regions with the Nordics and the Benelux, we will have the operations functions, including IT, customer operations, procurement, warehousing, among others. And of course, we set those up to gain scale and leverage and also the country specificities and maximize synergies capture from this. So this looks good. And now we start off, of course, also with setting all the other synergies in this.And from Q4, now this coming quarter, we will, of course, also include all numbers of Centralpoint within our reporting. And so exciting times ahead. And now before going into Q&A, let's summarize the third quarter.Net sales up nearly 4%, up to SEK 3,394 million, where organic growth for the group was 5.1%, with SMB at a really strong growth of 14.5%, LCP at minus 2.6% and B2C at 6.5%. Gross margin 16.4% versus 15.1%, up due to a positive product mix and our dynamic pricing model together with higher volumes, of course, and strong sales of private label products.Adjusted EBITA came in at a solid SEK 158 million, giving us an EBITA margin of 4.7%, an increase from last year's 3.2%. And the initiatives here and the actions we have taken on the cost side, both strategic and short term has given effect as well as our strong performance during the quarter.EBIT at SEK 114 million and EPS at SEK 0.89 per share. And on balance sheet, operating cash flow at minus SEK 93 million and leverage in the lower range of our target at 2.1 to EBITDA.So with a good organic growth and solid earnings in Q3, we see that we are correctly positioned with a strong unique digital relationship with hundreds of thousands of customers and in now an even more optimized e-commerce platform combined with strong relation sales towards [ corporates ] and public, which is now even more enhanced with the acquisition of Centralpoint. And with our service offerings now coming back in demand, we further increase our relevance to benefit our customers. And that, combined with our strong financial position, means that we are well equipped to take the opportunities and challenges that will be presented to us by the business climate and of course, from our customers.Good. And with that, I think we are happy to take any questions you might have. Operator?

[Operator]

[Operator Instructions] Our first question is from Daniel Djurberg from Handelsbanken.

[Daniel Djurberg, Research Analyst]

Yes. My first question would be on LCP and especially the public was hit by the component shortage, which was as expected, I would say. But can you possibly give us any flavor of the order backlog in terms of book-to-bill or increase percentage-wise or something in terms of how the order backlog and the outlook for, especially, I guess, Q1 '22 looks?

[Thomas Ekman, President & CEO]

I think what we have seen lately is the order lead time expanding. So it takes -- actually, customers are placing orders further ahead of when they want to have delivery. So order book is significantly bigger. It doesn't mean that all that is increased demand. It's mainly a longer order cycle time, let's put it that way. So we have orders for the full calendar year of '21 now, which is not the normal way of having the order book in our industry.So what we see is we have orders for a longer period, and we believe that we have now reached the peak of, let's say, order cycle time, and it will now stabilize and improve. And gradually, we will empty out and the, let's call it, order book that we have at the moment. If that will happen in Q4 or in next year's Q1 or Q2, very difficult to answer, but it will not happen in one go. It will gradually move back to normal.

[Daniel Djurberg, Research Analyst]

Perfect. And another question, if I may, on the Centralpoint now consolidated. Can you give any lesson learned earlier -- lesson learned so to say, positive, negative surprises? And any comments on the SEK 150 million in synergies, see if it's -- if you consider it reasonable, still low or it's a tad low or something?

[Thomas Ekman, President & CEO]

I think overall, it has been on the -- sort of no surprises in the acquisition and the closing process. And we still see that the SEK 150 million is reasonable and within the target. So that's good, and we have started to work on those, and we see that they can for sure materialize in the period that we announced earlier, '23, '24. So it is good. And also, we have seen the same development in the Benelux region as we have had in the Nordics, strong demand on SMB side, longer sales that you want into on sale factors on the LCP side with component shortage. But there's still a strong performance and strong demand. So it's encouraging. It has been during the spring now.

[Daniel Djurberg, Research Analyst]

Perfect. Good to hear. And the question to Johan, the last 1 here, on cash flow again. Inventory volume up on growth and actually working purchase work. Still, I guess, I would expect that it's mainly LCP that gets inventory rather than an SMB, and this division had a negative minus 2.6% organic growth. So can you elaborate on the inventory and also accounts payable being as slow as it was in the quarter? And what to think of cash flow or working capital in Q4?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. I think it's a good question. And I think it's good to explain and discuss the subject a little bit because we see a situation in Q3 this year as you would have seen in Q3 last year when we actually moved into a more drastic situation coming from the pandemic. And if you look at the graph on net working capital, that we presented before, you see very clear that in Q3 '19-'20, working capital went down dramatically compared to the quarters before. And we also said at that time that we were securing working capital in order to -- if the customers wouldn't be able to pay us. So we used all our leverage towards the suppliers to extend payment terms. That was a year ago.And now having lived through the year with customers actually continuing to pay on time and in full, we have now shifted a little bit the focus on -- from payment terms to the suppliers to availability because we think that it's better for us and better for us in productive results. So we have moved payment terms back a little bit towards more normal situation and at the same time, used the leverage to get products in a very difficult market situation. And that has paid off on the SMB side where we can capture, let's say, availability of products and push them to our customers because, as Thomas said before, on SMB, we sell what we have on stock and the customers are willing to buy what we have on stock because they need a computer. While on the public side, they have an already predefined product that they need to buy, so they cannot just change the SKU that they buy. And hence, they have a problem with delivery.

[Operator]

And our next question is from Christoffer Bjørnsen from DNB.

[Christoffer Wang Bjørnsen, Analyst]

I have couple of questions. So first of all, coming back again to the supply chain challenges that you mentioned in the -- especially in the public sector. So could you maybe just help us out understand better why this is more problem for the public sector than the other segments? I guess they have more stringent requirements related to which model they can -- models they can buy and stuff like that. But haven't you seen any kind of issues related to that in the other segments at all? Or yes, just if you could elaborate a bit?

[Thomas Ekman, President & CEO]

Yes. Yes. Sure. No, it is true, the short -- what you said there. I mean the public sector by customer-specific orders like a laptop with a specific processor or a specific graphic card and so forth. And they order those and they are stipulated in the contract. So it's sometimes longer time for public entities to shift out, to move to other models. And that, of course, affects the sales towards our deliveries, I should say, towards the public entities.On the SMB side and on the large corporate side, which are more flexible in their contracts and especially SMB, of course, they are more open to buy other types of models of laptops or computers and peripherals. And hence, we have managed to -- as you want also to look into put them on stock and also deliver to the SMB customers. So that has been -- and that's also why we can explain the strong growth in SMB because there we sell, we sort of push out the sales more than sort of pull out the sales. So there is a difference in model there. But we see also openings for the public sector. They -- given the fact that they need the equipment and then they also open up for be more flexible in the way of taking on hardware that they need. But that is the reason why...

[Christoffer Wang Bjørnsen, Analyst]

Okay. Great. All right. And then on that headwind, in LCP, what do you think the revenue growth would have been organically in the quarter, is that as an issue? What was kind of the demand in the quarter looking like in terms of year-over-year?

[Johan Karlsson, CFO & Executive VP of Business Support]

It is really difficult to say, but a couple of percentages for sure, it has affected somewhere in the range of, I would say, 5-ish.

[Thomas Ekman, President & CEO]

Yes.

[Christoffer Wang Bjørnsen, Analyst]

All right. That's great. And then 1 final question for me is on the -- you said that the gross margins were helped by maturing contracts in payment agreement in the public sector. Could you just understand -- help me understand that dynamic? Because I was understanding that it's become more and more normal that there are more stable margins for these kind of frame agreements through the whole lifetime of that agreement. And -- but still, if you're kind of seeing this maturing and then maybe next year coming towards to an end, does that mean we should see kind of a gross margin decline or going to a new frame agreement in the beginning of 2023 or something like that? Or how should we think about that dynamic now going forward?

[Thomas Ekman, President & CEO]

I mean as we have talked about before, there is this dynamic of improving margins within at least some of the public contracts and actually most of the public contracts, I would say. And therefore, the age -- the average age of the contracts in the portfolio will have an impact on the overall ability to deliver margins.One good thing with the acquisition of Centralpoint is that the portfolio has increased significantly at these a little bit larger contracts, and hence, there will be a more even spread of the contract. So we believe that the spike effect of this will be reduced as a consequence of the Centralpoint acquisition. But there will be, of course, changes in margin due to the fact that we win or lose large contracts.

[Operator]

And our next question is from Daniel Thorsson from ABG.

[Daniel Thorsson, Research Analyst]

Yes. So a question on the component shortage as well. I mean you mentioned the shortage of processors and graphic cards specifically, which we all know have been highly demanded in Bitcoin mining, for example. With that price coming down significantly in the last 2 to 3 months, have you seen any stabilization in the components market lately that could help you already in the current quarter, you think?

[Thomas Ekman, President & CEO]

Yes. We have -- I mean, we also -- we have, of course, intense talks and meetings with all the major vendors. And I think on a global level, you can say that the semiconductor shortage is more under control now. So the shortage is decreasing with that. What has been slightly more problematic now in the quarter has been the more low-cost components like video products codecs, the WiFi connectors, analog video component, which is sort of seen from an IT perspective as nonstrategic component. And they are having in shortage. So I think we have had a period of processes and graphic cards with the shortage of problematic supply chains. And now we have also seen on other types of components. But overall, I mean the -- we see light in this tunnel definitely, and that the sort of the shortage period which is also coming to end and more of the world [ stabilizes is best as well. ]

[Daniel Thorsson, Research Analyst]

Okay. I see. I see. And then secondly, on the private label, you mentioned that you see a strong development for private label. Do you see that more in B2C or SMB or LCP?

[Thomas Ekman, President & CEO]

I think in general, overall, we see that. I mean primarily -- I mean SMB has been a key driver during this quarter. But we also see it. Of course, we get more and more into the larger deals with public sector and especially also large corporate. Given the fact that, as we said before, we are in low complex areas like cables, [indiscernible] and the brand sensitivity for those is not high. So it's possible for us to exchange through our type of product, our private label product.

[Johan Karlsson, CFO & Executive VP of Business Support]

Sales is very similar in the different segments of private label.

[Daniel Thorsson, Research Analyst]

Okay. That's clear. And do you see the same opportunity in all of the 3 segments for private label?

[Thomas Ekman, President & CEO]

Yes, we do. Yes, we do. We do. We do. Yes.

[Daniel Thorsson, Research Analyst]

Okay. Great. I also saw that you mentioned nonrecurring items related to Vincere in Netherlands. That was a couple of years ago. Is that still integration with Dustin Group? Or is that integration with Centralpoint?

[Johan Karlsson, CFO & Executive VP of Business Support]

It is with, you could say, Dustin Group. It is to -- we are now melting the company down there together and then slightly or moving on to the Dustin ERP platform. So that's what we haven't done before. So that's what we have initiated on.

[Daniel Thorsson, Research Analyst]

Okay. Okay. I see. So that's with Dustin. Okay. And then finally, we already got some questions on cash flow. But when you say coming back more to a normal level, do you mean the minus 1% of sales that we have seen in the last 2, 3 years? Or do you see any other underlying changes in that market causing a new...

[Thomas Ekman, President & CEO]

No, I would say exactly what you said.

[Operator]

[Operator Instructions] Our next question is from Ramil Koria from SEB.

[Ramil Koria, Analyst]

Can you hear me guys?

[Thomas Ekman, President & CEO]

Yes. We hear you loud.

[Ramil Koria, Analyst]

That's super, super. A bunch of very good questions already. Then let me add some from my side. So first off, on Centralpoint, with the risk of this already been answered in previous calls, could you tell us how much of Centralpoint is large core and public segment, respectively?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. Out of SEK 7 billion, SEK 6 billion is basically LCP and SEK 1 billion is SMB, yes.

[Ramil Koria, Analyst]

Okay. Okay. And could you elaborate a bit on how Centralpoint has been affected by the component shortage since when you announced the deal basically?

[Thomas Ekman, President & CEO]

I mean we see the same development in The Netherlands or in the Benelux as we do in the Nordics for that. They're, of course, also affected by the component shortage, but also the same strong demand and it's the same sort of future we see there as well. I mean on this scale, it was sort of on a global question. So it's the same sort of pattern in the different regions.

[Ramil Koria, Analyst]

Right. And in terms of sort of margin impact, et cetera, I mean is it a tangible step down in profitability in Centralpoint? Or have you accounted for it in the updated pro forma figures and close in this presentation material?

[Thomas Ekman, President & CEO]

Yes. Yes. No. No, it's not affected in that. And yes, it's updated in the numbers here, yes.

[Ramil Koria, Analyst]

Okay. Okay. And then on the OpEx side, there is a minor cost step-up in the quarter, should we -- and I mean, you've been quite successful in taking out some costs in the last few quarters. Is it fair to assume that OpEx has sort of -- has troughed now and from here on forward, it's a bit of pandemic savings coming back and you continuing to invest now into sort of the next phase of the company trajectory from here?

[Johan Karlsson, CFO & Executive VP of Business Support]

Yes. I think it's a fair comment. Last year, it was extreme, I would say than kind of shortsighted actions to kind of secure situation. Now we're back to more normal, but with the effects of some of the efficiency projects with the full impact of that in the cost numbers. So I think the current run rate is more or less continuation -- that can continue maybe with the exception that the traveling has been very low in this quarter as it might come back a little bit at the summer, but these are relatively small numbers.

[Ramil Koria, Analyst]

Right. That's clear. And a final 1 from my side, perhaps touching upon Daniel's last question as well about the gross margin side. I mean how sustainable is this level everything said so far, there seems to be a lot of moving parts here with the service revenues picking up towards the end of Q3 but still some positive mix, et cetera, et cetera. What should we expect for the coming few quarters, of course, not considering Centralpoint having structurally lower gross margin, so just Dustin Group as is pre Centralpoint?

[Thomas Ekman, President & CEO]

Well, I think if you look at SMB, we have a very good margin due to the, let's say, supply situation on hardware. So that's a positive sign at the moment, I would say, compared to an average margin. So we're probably going to see, over time, at least the challenge to keep the margins that we have at the moment. While at the same time, services have been hit quite far from a pandemic situation. So they are on the low side at the moment. So overall, I would say you can expect margins to not move a lot. And if we're successful with services, of course, our ambition is to improve margins.

[Operator]

[Operator Instructions] And there seems to be no further questions. So I will hand the word back to the speakers for any final comments.

[Thomas Ekman, President & CEO]

Very good. Thank you very much, everyone, for tuning in today and listening. And just stay tuned for us. And if you have any questions, just come back to call or e-mail. Great. Have a good day. Thank you very much, everyone.

[Johan Karlsson, CFO & Executive VP of Business Support]

Thank you.