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Mips AB
Earnings Call Analysis
Q3-2023 Analysis
Mips AB
Mips' CEO, Max Strandwitz, and CFO, Karin Rosenthal lead the third-quarter financial discussion, revealing a challenging period with a significant 32% sales decline and a corresponding 33% decrease in organic growth, predominantly afflicted by downturns in the bike and Moto categories. Despite these hardships, Mips observed a promising inception to the fourth quarter and anticipates a market rebound in 2024, though some retail uncertainties persist, as evidenced by the insolvency proceedings of Cigna Sports.
Amidst a turbulent market, Mips announced two critical safety partnerships with MSA and LIFT Safety, which are expected to solidify its position in the PPE industry and aid U.S. market success. The company underscores an increase in brand penetration and awareness, resulting in market share gains across key channels, thus maintaining a steadfast commitment to its long-term strategic and financial objectives.
The sports segment faced a 29% sales contraction mainly during the quarter's outset, albeit September displayed uplifting momentum. Conversely, the Moto segment experienced a steeper 68% decrease, with a conservative retail atmosphere, predominantly in the U.S. market, leading to expectations of muted performance in the next one to two quarters.
Mips' safety category shows robust growth and engaging global interest, with strategic expansion and partnership launches forecasted for upcoming quarters. The brand's representation in the safety market is now estimated between 30-40% of the addressable volume, poised for future growth following significant industry fair participation.
Financial soundness is evidenced by a sturdy cash position of SEK 371 million, devoid of any loans, and an operating cash flow of SEK 12 million. Despite the decrease in net sales and gross profit, Mips managed a gross margin improvement to 73.1% compared to the previous year's 69%. However, EBIT dropped by 60% to SEK 15 million, with a reduced EBIT margin of 19.5% and mirrored a 33% negative organic growth.
In spite of the immediate weak market conditions marked by inventory reductions and soft consumer sentiment, Mips anticipates only short-term impacts. With positive developments in safety and continuous strategic investments, along with an increasing awareness and market share, the company retains its confidence in achieving its long-term financial targets.
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Welcome to the Mips Q3 2023 Report. [Operator Instructions]Now I will hand the conference over to the speakers, CEO, Max Strandwitz; and CFO, Karin Rosenthal. Please go ahead.
Good morning, everyone. My name is Max Strandwitz. I am the CEO of Mips. And with me today, I also have our CFO, Karin Rosenthal. We will take you through the Q3 interim report presentation of 2023.And if we start with the key highlights of the quarter, we did see a soft quarter with a decline in sales of 32%. If we adjust for currency effect, organic growth was down 33%, and the soft performance that we have seen is mainly from the bike category -- subcategory and Moto.As explained also in the report, we have seen a good start of the fourth quarter in terms of orders received and the indication from our customer in the industry is also that the markets will recover in 2024. There is still some short-term uncertainty in the retail environment. I think you all have seen the announcement from Cigna Sports, which is the biggest e-tailer in the world, which is now in an insolvency processes and so on, and quite a lot of disruption in the whole e-tail environment. But what we have in our control looks good. And like I said, we are at least off to a good start in Q4.Then we are also very happy with the announcement we did of the 2 strong partnership in Safety. Of course, the first one being the global brand MSA, which is one of the biggest player in the PPE industry. And then, of course, LIFT Safety, really important building blocks for the success of the U.S. market. We also see good improvement in penetration and awareness in the end market. We have just received recent surveys. Despite a very challenging market environment, we are gaining shares and gaining penetration in all our key channels. And we remain confident in delivering on our long-term strategy and our financial targets.In Sport, we are still impacted by inventory adjustments. We did see a challenging quarter again in Sports with a decrease of net sales of 29%, mainly explained by the soft sales development that we saw in the beginning of the quarter. We did see an improvement through the quarter, and we actually see positive momentum in September.There has been very erratic sales development in the U.S. end market, which has created some uncertainty on short-term outlook in bike. Customers still plan for a major recovery in 2024. And despite the soft sales performance, we see positive development, like I said, on both global awareness. So more people are aware about the Mips brand and what we do. And we also see that the penetration despite, of course, soft sales numbers, we are gaining shares on all the key channels. And we also see a very positive outlook for bike going forward.In Moto, we have been disappointed by the performance in Moto. We see slower markets. We saw a soft development in the quarter with a decrease of 68%. We see a much more cautious retail environment, especially in our important U.S. market, and we expect that the coming 1 to 2 quarters we see soft performance in Moto. We have launched several initiatives to improve sell-through and awareness and of course, also to drive higher volume in the category. We haven't changed our view on the long-term outlook, still strong interest for Mips in the category, supported by new partnerships and models being launched during the coming quarters.If we then turn to next page, and we go to the slide with Safety. We continue to see strong development in line with the ambitious plans we have. We continue to see good interest both in the U.S. and the European market. We did launch the 2 new partnerships in connection with the 2 big fairs of the year. This week, there is both the NSC in New Orleans in the U.S. market and also the biggest industrial fare of the year or actually it's only every second year, A+A in Dusseldorf, where we, of course, participated in both of them. We always have a requirement that if a brand shows a Mips product, we always need to do an announcement first. And of course, both of these 2 brands showed the Mips technology and of course, therefore, we did the announcement. So we will do launches with these brand coming quarters. Really exciting to have MSA on board and with them on board, our total platform for -- within the safety category is somewhere 30% to 40% of the addressable volumes. So really a strong platform for growth and really looking forward to the long-term delivery in the safety category.If we then go into the next slide, and we look at the Investment. We did an exciting investment in sensor technology. It's all aligned with our strategy of doing more in the helmet. It was the first strategic investment towards exploring the opportunity in the sensor technology market. We have evaluated a lot of different technologies and we consider the Quin technology to be leading in the sensor technology market. The technology will enable us to gather a lot more information regarding incidents, but also about consumer behavior, all very important steps in delivering the Mips vision, ambition and strategy, and also, of course, a great way of becoming a lot more consumer-centric.If we then look at the category development, we did see soft performance in Sports, down 29% in the quarter. Moto, there is several activities to boost the performance again and start delivering growth. And in Safety, we are making great progress and of course, happy with the performance there.With that, I hand over to Karin, our CFO.
Good morning. I'm Karin Rosenthal, CFO of Mips, and I will take you through the financial part of the presentation. We saw a soft development in the third quarter with a decrease in net sales of 32% and adjusting for FX due to a strong dollar versus SEK, sales decreased 33% organically. Gross profit decreased with 28%, and we saw a gross margin of 73.1% versus 69% last year. The increase was due to product and volume mix.In OpEx, we continue to invest in our strategic priorities. EBIT was down 60% to SEK 15 million and an EBIT margin of 19.5% and operating cash flow of SEK 12 million in the quarter. If we look at our financial KPIs, minus 33% organic growth, 19% EBIT margin and SEK 12 million in operating cash flow.If we then turn to next page and look at the development for the first 9 months. Net sales decreased with 42% and adjusting for FX, sales decreased 44% organically. Gross profit decreased 42% and we had a gross margin of 71.1% versus 72% last year. The decrease was due to higher share of fixed costs as an effect of decreased net sales.In OpEx, we continue to invest in our strategic priorities, marketing and R&D. EBIT was down 74% to SEK 53 million and an EBIT margin of 20%. We had a negative operating cash flow of SEK 21 million due to tax payments relating to the 2021 profit. So looking at our financial KPIs, minus 44% organic growth, an EBIT margin of 20% and minus SEK 21 million in operating cash flow.If we then turn to next page, we are now on Page 10, balance sheet and cash flow. We have a strong cash position with cash and cash equivalents of SEK 371 million. And just to remind you that Mips don't have any loans. Operating cash flow in the quarter amounted to SEK 12 million. We made an investment in Quin of SEK 80 million in the quarter. We paid out dividend of SEK 144 million in May. We had a new share issue due to exercising of warrants amounting to SEK 94 million during the second and third quarter. And we had an equity ratio of 89%.Over to you, Max.
So if we then summarize the quarter, it was a soft quarter driven by weak market, still influenced by inventory reduction and a very soft consumer sentiment. We do see good development in safety with strong partnership announced in October. We see strong trends in awareness and market share development despite the challenging market conditions that we see. And of course, since we believe that this is only short term, we continue to invest behind our strategic priorities to make sure that we deliver on our long-term strategic plan. And we remain confident to deliver on our long-term financial targets.With that, the official presentation is ending. And of course, we open up for questions.
The next question comes from Oskar Vikstrom from Berenberg.
To start off, I was just wondering, in the end of the CEO letter, you mentioned this recovery taking place gradually and a bit varied depending on markets and the brands and so forth. Would you be able to give us a bit more kind of clarity what you mean by that, what markets you're seeing moving quicker than others, et cetera, just to get a better sense of what's going on there?
Yes. I think, I mean, as we also communicated before, the biggest impact was on the U.S. market despite that they actually have had a little bit stronger markets, but they also hold a lot more inventory. So that recovery takes a little bit longer. European markets have less inventory, but also saw a much weaker consumer earlier in the recession, if we can call it a recession. So Europe is a little bit earlier out of the starting gate. When it comes to retailers, we actually see that they have normalized across most of the geographies or actually all the geographies. It's more relating to the brands and depending where they are. So U.S. a little bit more behind, but of course, also have a stronger consumer market.
Yes. So is it fair to assume then that the order intake and this kind of slight pickup in activity you're seeing is coming more from Europe then?
Yes, it will come more from Europe.
Okay. And the other thing I was thinking is you're mentioning you're now like post -- pre and post pandemic. First of all, I noticed you said that most major markets are above where they were before the pandemic. Just curious which markets aren't. And then also on the mobile penetration, of course, you've added more models in this period, but maybe could you give us a sense of the volumes within those models? I'm thinking now have you added sort of smaller volume type brands as opposed to bigger brands? Or how should we view kind of the volume increase over this period and not just the models, let's say?
Yes. Thank you. So I think, I mean, probably all of you also follow Shimano. Shimano is 27% higher than they were 2019. Of course, they also have a certain impact on price in their assessment, but probably somewhere around 20% is their sales compared to pre-COVID. And I think that's probably a fair assumption on most markets that they are somewhere around 20% bigger. So of course, we haven't heard any market that actually have been shrinking during the COVID situation. We know that the Chinese market, for instance, was a little bit smaller because no one were actually allowed to be out and so on. And that's also why you see a little bit of a boom of the Chinese market. But we actually haven't heard any markets that have been shrinking as such.And when we then talk about volumes and models. If we look at the amount of models that we have versus the number of 2019, we are up 102%. If we look at the number of brands we had in 2019 versus today, we are up 148%. So of course, we have a bigger portfolio, but you also need to be a little bit careful because a little bit what you also alluded to, some of the brands since we had most of the bigger brands already is smaller brands. And of course, they will not contribute to the bigger volume. From -- when we look at the market and our addressable market, we have said before that we also estimate that it's somewhere around 20% bigger, but our assumption comes from 2 different things. The first one is the general market trend and the growth of the addressable market. We assume during COVID that it has been growing with an average of 3%, 3.5%. Of course, it's not that linear, but on average around 3.5% per year. That makes the market around 10% bigger during COVID.And then, of course, since we also have an opportunity to reach down in price points, we can now go from USD 40 to USD 30 in terms of addressable market. That has increased our assumption with another 10%. So our 10% is probably lower than most brands and partners in the industry. And I'm really, really happy if I'm surprised that the number is too low, but 10% growth of the general market is quite big. So hopefully, that answers your question.
Yes, that's very helpful. And then just maybe finally on Safety, quite interesting. So if I understood it correctly now, you're basically addressing 30% to 40% of the addressable market. So that would equate to sort of 33 million to 44 million helmet models potentially with the current customer base. Is that correct? And then -- yes, sorry.
Yes. The customer base that we have represent around 30% to 40% of the total market. So by having them as a customer, we have a potential to reach 30% to 40% of the market. It doesn't mean that we have in all their models representing 30% to 40% of the market, if that makes sense.
Yes, no, that's fair. And then just -- I know you previously mentioned sort of Safety reaching SEK 20 million to SEK 30 million this year with SEK 9 million year-to-date. Do you still view that as a possibility?
Yes. I think, I mean, what we have said is 2 things that we will double our sales every 6 to 12 months. And you see also on the numbers that we are tracking well ahead of that. SEK 20 million to SEK 30 million will be a little bit of a stretch, but at least we are up for a good fight.
[Operator Instructions] The next question comes from Emmanuel Jansson from Danske Bank.
I hope you can hear me. And I've got -- I think most of my question has already been answered here just before calling in, but I've got one question on the OpEx base. Just looking on the absolute figures in this quarter compared to Q2, there seems to be a bit lower, especially maybe on the marketing side. Can you maybe explain why and what should we expect going forward from here?
Yes. So if you compare to last year, we had the trade shows in the third quarter, but this year we had them in Q2 and Q4 instead. So that's the biggest difference.
Okay. Perfect. That's clear. And also coming back to the bike market. Max, you mentioned Shimano previously and they, a few days ago, reported their Q3 numbers. And I think you have explained it before, Shimano produced a lot of components and they are much earlier into the cycle, maybe selling into the 2024-2025 bike season. But looking at their statement, they state that retailers' inventory levels still seems to be quite high, both in Europe and the U.S. Can you please describe why they do see this?
Yes. So I think the Shimano example is good. The thing is with Shimano is that they are not earlier into the process. They're actually later into the process. If you actually look at their performance in 2022, they still had good growth, and it will take them a little bit longer probably. I don't have a full view on their numbers, but that's just my assumption because, of course, they deliver components and so on.And if you look at inventory levels in general, especially in bicycle versus bicycle helmets, bicycle is still higher. And of course, that's what they are seeing. So bicycle helmets has been worked through a lot quicker than the normal bikes and the e-bikes and so on. So that's why they made that comment. I think if you look at inventory levels around the world when it comes to bicycle helmets, like I also said and mentioned in the report, at the retailer side is more or less normalized across all the geographies. With some brands, you still carry some stock, especially on the lower price points. But of course, we also see that that is being normalized over time.So no, we don't share the view, and I don't think anyone outside bikes the same. You have a little bit the effect in clothes and also on shoes where they carry more stock. But other, when it comes to apparel and accessories, is less than you normally see in bike.
Okay. Perfect. That's very clear. And just to make sure, when you say that the markets -- overall market believes that they see a strong or at least a good underlying demand for 2024, you mean for sales into 2024 sales into 2025 for your part?
Yes. So there is 2 different things. And I think it's always good to divide it. So first of all, when it comes to the market because, of course, we need to start with a bigger picture, the market is expected to return back to growth. So that's what will be sold in the markets within 2024. Then, of course, the main impact from Mips as a company, and I think that's where our picture is distorted quite a lot, and that is when you look at our performance, of course, it's disguised quite a lot by inventory reduction. So instead of us selling to a brand, they actually take all the products they sell from their inventory levels. And some of our bigger customers are at index 20 or 30 versus the year before. And that's why you see the dramatic drop in sales in this year.So when we look at 2024, just not having the whole impact of inventory reduction will have quite a big impact on our sales and, of course, also our P&L. So for us, it's a little bit of a double whammy. The markets are down. We could live with that given that we are increasing our penetration, launching more helmets with Mips, and so on. But the whole inventory correction, that has a significant impact on our P&L and we don't see that to the same extent in 2024. And that will be the big game changer for us in the 2024 numbers.
Perfect. That's very clear. And last question from my side. How hopeful are you that the models that you have implemented -- I think it's over 200 new models have equipped with Mips. Do you think all of these -- the majority of these models will be launched into the 2024 season? Or how should we view it?
Yes. So I think, I mean, we see a very good project momentum. During last year, we did 217 new helmet models. So you're very accurate on the number. And of course, the positive momentum continues. We still see very positive customer request. We are up just in the quarter in terms of project revenues around 20%, which you almost can translate to 20% more projects. So we haven't seen any difference when it comes to our customers wanting to do more projects. And of course, in motorcycle and in safety, those are versus basically no comparator. So we see a big interest when it comes to new helmets and so on. Normally, the lead time is around 18 to 24 months from when we start the project until we actually see revenue. So most of those 200 helmets that you have seen will be launched and produced in Q4 and during 2024.
The next question comes from Daniel Thorsson from ABG Sundal Collier.
I have a question on Quin here. I see that there are a couple of models out in the market with both Mips and Quin. Do you have any indication on how they are selling and what type of price levels are they in? And is the interest good?
Yes. I think, I mean, when we evaluated technologies, we looked at a lot of different things. Of course, the potential is the main thing we are looking at and we evaluated a lot of different technology and so on. And Quin was the leading one. They are at a couple of strong brands at the moment. You can find them in all those helmets in FLY Racing and so on, and there will be a lot more modest launched with the Quin technologies. So they have quite a good momentum on the market, and you also see that it attracts quite a lot of interest.I think also what -- it's not only within helmets because, of course, they also do products outside helmets, for ATVs and other types of products and so on. So but in helmets, yes, there is a positive trend, but you will also see other products being launched in other categories. So they have a very positive momentum and doing really, really well on the market.In terms of price level, the technology is a little bit different because they work with a dual accelerometer system, which means that they have a much higher accuracy than the other sensor technology that we have seen on the market. That also comes with a cost. So it is a couple of more times expensive than other sensor technology on the market. So normally, you see them at the higher price points and so on. Over time, you can, of course, also assume that they will start reaching down. But when you're building presence on the market, building brand equity, you normally start at the higher price point and then, of course, you work yourself down.
Okay. Interesting. And then I have a question on the cash flow here in the quarter, which was quite weak obviously driven by the weak result here. But how do you view the credit worthiness of your customers, especially the big to smaller helmet brands? Do you see any risk of bad debt in the receivables?
Yes, we do. I think we are extremely careful in terms of our exposure and so on, and anyone following us knows that we have a very low history of credit losses and so on. But times are different at the moment. Cash is a lot more expensive and so on. And of course, we are very restrictive on our deliveries. If our customers are not paying or cannot pay, they will not get any additional product and so on. And of course, that is also hampering sales a little bit, but I will not sell something where I see the risk of not getting paid. So there we are a bit restrictive. We have like weekly meetings where we are following up anyone that is slipping when it comes to payment.So far, what we have seen during this whole process is that we have 2 partners that goes into like an insolvency process and so on. Total exposure that we have seen is somewhere around USD 200,000. And of course, we have also accruals relating to that. So no big exposure, but you need to be extremely careful these days. We are on the very strict financial disciplines when it comes to who we sell to, how much credit we give them and so on. It's not difficult to sell if you don't plan to getting paid. And for us, it's really, really important to have that discipline.So, so far, no big exposure. We are also, of course, following all the bigger customers that we have, but most of them belong to bigger industry with quite healthy balance sheet and so on. But of course, we are very careful on that aspect.
Okay. That makes sense. Let's follow that then. And then finally on the inventory levels for bike retailers here. I mean, is there a risk that they will carry lower inventory than before going into 2024, given that we have a weaker consumer, we have higher interest rates, which means that we still have some quarters left with net inventory reductions, if you say that they are normalized right now? Is that the risk?
Yes. They are already carrying less inventory than normal. If you talk to most of the retailers, not a lot of them have actually bought the innovations of this year, and some of them have even been restricted at innovations of last year. So what you also see a big consumer trend is that if the consumer really want to have the latest and greatest product, they actually go to a lot of the brands, own e-tail channel to get the new innovations and so on.So the inventory reduction in terms of inventory levels, that has already happened. So I think the last 2, 3 quarters, you really see them adapting their inventory levels to the new normal. They also communicate to all the brands that we expect you to hold full inventory and to be able to deliver with very short lead times because, of course, they are as sensitive when it comes to cash as everyone else. So that inventory work, Dan, has already happened.
The next question comes from Karri Rinta from Handelsbanken.
I wanted to ask specifically about the comments regarding the start of the fourth quarter where you say that the order intake has improved from last year. So how should we think about this in terms of sales because one could argue without knowing your order intake from last year is that you probably are meeting very easy comparables in terms of order intake. So I guess the question is that can we translate this into an expectation that your sales will start to increase as well in the fourth quarter?
Yes. So I mean, if we talk about growth that we also indicate, of course, if there is a growth in orders, that normally also results in a growth in sales. And that's what we have seen so far of the quarter. So a higher number versus last year. And you are right, there is quite soft comparators in prior year. I think, I mean, what we see now, we stop in saying at growth. That's what we have seen so far. How much bigger and so on, we will not give any forward-looking statements. There is a lot of uncertainty out on the market, and that's why we are a little bit more careful on the statement.You have probably seen the announcement from Cigna Sports, which is the biggest e-tailer in the world. They have around 70 different e-tail sites, which filed for insolvency. And there is a lot of disruption on the market. So what we have seen so far and the communication from our brands is positive. But of course, we don't have everything under our own control and that's why we're also a little bit more careful on that assumption. But at least we are off to a good start and we also ended the quarter, last quarter, in positive territory.
All right. That's helpful. Then Safety and as we have seen, especially Sweden and some other Nordic countries that construction industry is taking a beating on the higher interest rate. So what are your safety customers saying about their customers, especially the construction industry, both in Europe and in the U.S., about their behavior?
Yes. I think if you divide the markets in 3, I would say, first of all, if you talk to the U.S. markets, still a lot of very big infrastructure programs and so on, and the construction industry is quite strong. So there, we haven't seen any impact at all from the market. On the contrary, we see 2 trends. First of all, that there is a lot of PPE being bought and we see that the whole PPE market is growing quite fast.And what we also see is a very positive trend in terms of buying more advanced and more expensive PPE. We have seen quite a big conversion of what we have called before, which is from type 1 helmet to type 2 helmets. So type 1 element is normally the simpler type of helmet and type 2 helmet, there you have a more advanced offering, normally carries a chin strap, neck retention system and is testing to different standards. And we have seen a dramatic increase in those type of helmets.So the U.S. market works very much in our favor. Europe, in general, is softer. Of course, it is a very tough market. We have seen much more impact on the economy, especially from energy prices and interest rates and so on. And then when you look at the Nordic market, of course, the Nordic housing market is a drama. And there we see, of course, very negative sentiment on the market. So far, if we look at the customers that we have in Nordic, they are actually still growing. So it hasn't been translated to our numbers. Nordic doesn't have a huge impact at us as such, but we don't have great expectations when it comes to the Nordic construction market, I would say, at least for the next coming 1 to 2 years.
All right. Very helpful. And then finally, it's a busy morning, so you have probably commented on this. But could you repeat your comments regarding snow? How are you trending compared to last year? And what are your expectations for this season?
Yes. So I think in terms of what we know, of course, is preorders have been quite strong versus last year. So you see most brands are actually up. There has been some early indications, you saw SkiStar that the season is quite strong. That's mainly related to Sweden. And of course, with the currency effect and so on, maybe people don't want to go abroad to the same extent. The first indication from the U.S. market is that the booking situation is up and that there is very positive numbers. We have -- of course, we are facing quite a strong comparative in snow, where we grew almost 60% and if we can end flat against that number for 2023, I will be quite happy. So good progress, but of course, it's also up against quite a tough comparator in prior year.
The next question comes from Adela Dashian from Jefferies.
Yes. And apologies if this question has already been asked and answered. I was joining the call pretty late. How comfortable do you feel with your financial targets given the weakness in the different types of segments that you operate in right now and the performance year-to-date?
Yes. I think I mean financial targets, I think, first of all, we have 3. So of course, we have net sales, EBIT and dividend. I think you are probably alluding to the net sales number and so on. And there, of course, if we would use the 2023 performance as our platform and extrapolating that to achieve our growth target, then of course, it is a very challenging number. So if we think that 2023 reflect the new normal, we do not do that. We see that there is a lot more potential than that.What we have said before and exactly the way that we did last time also when we updated our financial targets when we were actually significantly ahead of the target and was being challenged for that, we have said that, first of all, when we conclude this year, like you normally do, we look at all the different categories and assess what is the new normal going to look like. Everyone is, of course, focusing a lot on bike because bike is, of course, a big part of the total Mips sales. There, of course, we have seen a very challenging market, but we expect it to return back to growth, and we still see a major potential there.When it comes to all the activities that we have done in bike, there is actually not a lot of things where we missed versus what we said we were going to do, but the market has not been in our favor. If you then look at the other categories, snow for instance, we are doing much better than we anticipated in our plans. Equestrian is also doing better. Moto, we have a challenge when it comes to street motorcycle. And there, we are reassessing our plans. And Safety, when it comes to the amount of customers, we are actually ahead of the plan. So when we are summarizing the year, we will put all this into one basket and assess what the potential new target and, if any, changes needs to be done. And then, of course, we will communicate them in due time.
That makes sense. And then also on Moto, you say that you expect some short-term pressure. When would you see an inflection point potentially in that segment? Is it really already next year?
Yes. So I think, I mean, Moto -- what have taken us a little bit of a surprise, so there is quite a lot of things that is happening in Moto. But normally, what you see when you go into a Moto season is, of course, that the season is normally built by a lot of preorders. So preorders, you normally get at all the brands and then all the retailers, they order preorders to get a little bit of discounts ahead of the season. That is also giving all the brands a very good calibration of what they will need for the season. If you look at the spring and the autumn by this year, everything is basically gone when it comes to preorders.So no one wants to commit to anything. Everyone is really, really worried about carrying too much inventory and is not putting preorders in. So you will see a much more even order pattern in Moto than we have seen before, and more I order when I need it rather than the previous preorder pattern. So that has taken us a bit of a surprise.And then the other thing that will really change the performance for us is that, of course, we launched a new technology last year, which we call Mips Integra, which is the first fabric solution that we have in Moto. We have received quite a lot of interest and that, of course, is waiting to be launched on the market. So there, you will see a volume pickup. And of course, a lot of the new brands that we signed.And then also part of our strategy has also been to launch new e-scooter brands. Maybe not from the higher price point, but of course, there you get access to a lot of volume. And when you add all those activities and the effects of those activities, I'm quite confident that Moto will go back into growth again within 1 to 2 quarters.
The next question comes from Carl Deijenberg from Carnegie.
Obviously, a lot of the questions have already been asked, but I wanted to follow up again on the statement here going into Q4. I heard what you said there that you don't want to quantify the exact development. But if you could say anything, maybe firstly on sort of the monthly comparisons that you're facing here in Q4 versus Q3 last year because when I look at the revenue development last year, that was relatively unchanged Q-on-Q in absolute numbers. But I recall also from previous years that Q4 is usually up sequentially. So if I rephrase it, is this development that you're talking about, is that sort of mainly a result of sort of multiple comparisons becoming this year? Or is actually the underlying momentum measured on a sales per brand or what you want to call it, sort of looking better in your view?
Yes. Well, I mean the underlying momentum, and of course, coming back to the explanation that inventory reductions or having less an effect. You also see that the orders per brand is increasing. So the main effect is, of course, from brands ordering more. And I think it's also quite important that what is being ordered for Q4 is not something that will hit the market in Q4. What is being produced in Q4 and what we receive as an order is product that will hit the market in Q1 2024. So that's why we see less of an effect from what happens on the market and that we actually record sales in Q4 relating to whatever will hit the market in spring 2024, where I think everyone agrees that the market is a lot stronger. And that's what we are seeing.
All right. Very well. And just a final one, following up on that, on the -- I know you don't explicitly share this, but sort of momentum that you were experiencing in Q4 last year, October, November, December, what was the trend in between those months? Could you share anything? Was it accelerating on the downside towards the end of the quarter in terms of your order intake in sales? Or was it relatively stable throughout?
No. Last year, the months were quite equal in terms of size. It was not that one was substantially to get in the other one. They were almost on par all 3 months.
Okay, very well. And just a final question. Just if you could remind us how many brands are you serving in Safety today in total with these new additions that you launched now?
Yes. In total, we have announced partnership with 15 brands.
The next question comes from Alexander Siljestrom from Pareto Securities.
Just one follow-up here. Do you still see the customer inventories largely being washed out here in Q4?
Yes. I mean there is some brands that will carry inventory into next year, like I said also on the little bit cheaper helmets as such and so on where we still have some inventory. But most of the customers will have more or less normalized inventory by the end of the year. And then it's our customers, it's not the retailers.
[Operator Instructions] The next question comes from [ Guy Lasik ], [indiscernible].
So most of them have been answered I think. Just to come back maybe on Q4 and make sure I clearly understood what you mentioned. So you mentioned that Q4 will improve sequentially linked to the fact that the [indiscernible] this summer was a bit better, right? But you even provide the guidance of in-growth in Q4. Is it what you said? Sorry, I think I missed something. Could you please clarify that point please?
Yes. So first of all, in Q4, yes, we do expect sequential improvement, but do we guide for growth in Q4, what we have said is that we will not give any forward-looking statements because it's too uncertain times. But what we have seen so far in the quarters in terms of order received, we see good momentum and that's also how September ended and so on. So we are off to a good start, but I will not give a forward-looking statement on the whole Q4 as such.
There are no more questions at this time. So I hand the conference back to the speakers for any written questions and closing comments.
Yes. So I think, I mean, we also got 2 written questions. So one is around what actions we are taking today similar to what GORE-TEX have been doing when the patent expiring. And I think that question comes to that some of our patents is expiring in 2030 and 2031. And as you know, a lot of our focus has been on building the brand because that we believe is the strongest protection that you can have. GORE-TEX actually doesn't hold any patents, but they have a very strong protection by the customer because they are the obvious choice. And that, of course, is what we also want to achieve.Then of course, we constantly file, of course, new patents. A lot of the products that we are using in safety, for instance, they are expanding in 2040 some of the patents that we are using in motorcycle and so on. So of course, we try to prolong the patents as much as possible, but the best protection we possibly can get, that's from the consumer seeing us as the obvious choice. And the only way we can do that is to build a preference from the brand, and that's what we are doing.Then the other question was relating to how long the helmet renewal cycles are in the different segments. And of course, the pandemic situation has changed renewals cycles a little bit. Historically, bicycle helmet has been changed every 5 to 8 years. You saw during the pandemic that the renewal cycles was down to around every 5 years. I believe that over time, somewhere around 5 to 8 years is probably a normal assumption to have. Then when you look at the other sectors like snow for instance, there you see that a lot of people tend to have their helmets 10 years or more. You don't use it a lot. You have it maybe 1, 2 weeks per year, then you put it in the basement. It's quite well protected against sunlight and so on. And of course, you see less of an impact.Motorcycle helmets, you also tend to have an average of around 10 years. Most common, you actually have not 1 motorcycles, so you actually have 2 motorcycle helmets on average per person, and you normally carry them every year. Then when it comes to safety helmets, you have them normally 1 to 5 years depending on what type of helmet it is. If you're in a big group there, they normally have a helmet changing requirement. So you normally do it every year. Or at least you change the inner content of the helmet, so if there is a harness system, you exchange that every year. And if they do that, then of course, they also need to exchange the Mips system. So very, very much around the category and so on. The most frequent helmet changing we see in safety element. And of course, that's obvious also because you use the helmet every day.Then, of course, we also got 2 more questions. We got a question on how the insolvency of Cigna impacted us as a company. We don't sell directly to Cigna or the Cigna brands. It's only done through our customers. We believe that the total e-tail business is somewhere around 20% to 30% across all the geographies. And of course, Cigna, even though they are big, they have a minor share of that. I think some of the brands will probably be quite impacted by the Cigna insolvency. I think over time, someone else will pick up that business. But of course, there could be some short-term disruption. We are not impacted directly from the Cigna insolvency, but of course, it creates quite a lot of disruption on the market. And what the market doesn't need at the moment is more uncertainty, especially not around the retailers and e-tailers.And then, of course, we also got the question, is it fair to assume that September and month-to-date October in terms of orders received is expected to deliver positive growth? And like I said before, yes, we see a positive momentum from what we have seen so far of the quarter.So with that, we don't see any more questions. Thank you all for listening in and are looking forward to the Q4 results call. Talk to you again then. Thank you, everyone.