Micro Systemation AB (publ)

STO:MSAB B

Earnings Call Transcript 2020-Q3

[Joel Bollö, CEO & President]

Hi, and welcome to this 9-month presentation for MSAB. We -- who are presenting today is myself, Joel Bollö. I'm the CEO for the company. And on my side here, I have Daniel Hilmgård. He is our CFO. Next slide, please. So a short history of MSAB. MSAB is a pretty old company. We were founded in 1984. We have been doing a lot of different good stuff during the history, but today, we are 100% focused on mobile forensics. We came into this industry in beginning of 2003. Today, we have customers in more than 100 countries, and we have a broad portfolio of products, with over 200 employees. We do -- are a public listed company on NASDAQ OMX, Stockholm. Our share is named MSAB B. We are a long-term partner and trustworthy. What do I mean by that? Well, long-term partner, we hope our shareholders understand the value of staying with us for the long time. We have had a good journey as a company. But also with partners, we work in an industry where trust is very important. And customers of ours have been with us for a long time, and we see every customer as a long story or a long-term relationship. We believe in doing good financial-wise. So we are a AAA credit rate company. We've been so for many, many years. And most importantly, we are here to do good business, create value for our shareholders, but also, at the same time, we want to help create a safer world. Next slide, please. So let's have a look at the figures. That's why we're here. Most of us are interested in the figures. So here we see the figures for the third quarter and also year-to-date. Let's start to have a look at the third quarter figures. The net sales came in at almost exactly -- I would say exactly the same as last year, SEK 93.3 million. And that's actually a growth of 3.4% in local currencies. EBIT landed on SEK 29.4 million, which actually is almost 50% better than last year. And that turns out to -- the EBIT margin was about 30% this year. It was 31.5%. And this is what I have tried to explain in the past, this show -- and showing the strength in our business model, which means that when we pass the cost in terms of revenue, the rest becomes profit since we have a very high gross margin in our sales. So what does this turn into for the year-to-date? Well, now we are up to SEK 243.4 million, which means that we had growth in -- almost 9%, a little bit above 9% in local currencies. And the profit, the EBIT amounted to SEK 32.6 million compared to SEK 2.7 million last year. So we are more than 10x better than last year in terms of profit. And we will have looked into the figures, the reason for the profit increasing so much as they do. So during the third quarter and year-to-date, I would say I'm proud of what we have performed and how we have performed so far this year. It's been a great start. I'd say it's been a great year so far, considering the COVID situation, that we haven't been able to travel as such. But I'm going to get more into how we handled that a little further on in the presentation. Next slide, please. So here, we see the sales distribution region-wise in the different areas for the January to September period. We can see that we have had growth in Asia, CIS region. We had a slight decrease in sales in North America, and we have more increase in EMEA and Latin America. The EMEA, I would say, is the absolute majority of that. This year, we know that third quarter is important and a huge -- a lot amount of sales in U.S. All the federal governments are closing their budget year-ends in end of September. This year, due to COVID, there has been -- a little bit harder to get some decisions made. There are decisions that's been postponed. The -- these organizations are partially working from home, so get together the teams, et cetera, have had impact on the sales. That said, we have strengthened our positioning, I would say, in general, but the new businesses have been a little bit postponed. Next slide, please. So here, we see the distribution of sales between new sales and license renewals. And we can see that the total new sales for the 9 months is a little bit down while the license renewal continued to grow compared to last year. And the comment on new sales, I would say, is that we have no problem at all selling new products to existing customers, people that want to increase their investment in our products and they like what we do. We do a tremendous amount of good impact and strong releases for our customers. And that has also been shown by the license renewal rates that continued to increase. But the new sales is impacted by the COVID. To what extent? Well, it's hard to say where we would have been without COVID, but it would be wrong of me saying that it has no impact on what we're doing. That said, I believe that MSAB is in a very strong position. The kind of work that police do with our type of tools will not, in any way, decrease just because -- well, I would say, it would not have such a big impact as many other industries due to COVID. So we believe that it's a temporary thing that the sales doesn't continue to do better than year past. Next slide, please. Here, we see the split of new sales, what does the new sales contain of. And we can see the Frontline, the XAMN, the training actually continues to grow. Office version is slightly down even though it's on a pretty high level. Some comments on training is actually that we had -- really hard to provide training in the beginning of the year, especially the second quarter when everything was totally locked down. I'm happy to see that we're now catching up and over-delivering even over the 9-month period. We will continue to do good in training. We are delivering as much as we can, and we are transforming more and more of our trainings also into being more virtual or digital trainings, even though live training is -- for some certain type of education is really hard to do online since it's a lot of hands-on on different devices. There is one steeple that sticks out the most here, and that is actually from a positive perspective, what we term other. A lot of the growth in other is actually in show -- I can say this is proven showing the strength in what we are starting to deliver in terms of getting out data of the most advanced phones like iPhones, Samsungs, LGs and others. Because a lot of the growth -- what is termed under others is what we have under our advanced acquisition lab, where customers can invest and get access to these most advanced capabilities under strict NDAs. And it will continue to grow in the future since we are doing such major improvements in our capabilities. Next slide, please. So here, we see a slide of the sales quarter by quarter, both the net sales, the EBIT and the EBIT percentage. So you can see the volatility in our business. But there is a pattern that we have strong H2, while the H1 is a bit slower. That said, I'm very proud to say that for the last 22 quarters, we have been profitable for the 19 ones. And if you look on this graph, you can actually see that the profit for this quarter, third quarter 2020 is actually the second best quarter ever profit-wise in MSAB's history. So I'm very proud of what we are delivering for the third quarter 2020. Next slide, please. So I would like to highlight some of the key figures that is shown on the screen right now. There's actually 3 things I would like to highlight. First is the revenue growth. If you look on January to September, last year, we had 2.8% growth. This year, we are up to 8.8%. I think it's a good pattern that we should continue to do. Second one I would like to highlight is the EBIT margin. Last year, so far into September, it was 1.2%. Today, it's 13.4%. It's a tremendous improvement in that one. And also, return on equity went up from 4.2% to 36.5%. So it shows the strength that -- in our business model and the capabilities that we actually are able to perform under the circumstances when many others, even including in our industry, is actually decreasing or struggling just surviving while we increase and show the second best quarter profit-wise ever in the company's history. Next slide, please. So that was the presentations of the figures for the third quarter and 9-month of 2020. Let's jump into and briefly go through what's happening on our market and our products. We are very proud of what we are delivering in terms of our products. We improve the strength of what we do. I'm going to try to explain that in the coming slides. But most importantly is that our set of different tools actually turns into a solution. So we see that what we deliver to our customers is not just a set of products, it's actually a total solution for them to be more efficient in their way of securing evidence from different types of digital media in general, but more specifically from different phone devices. Next slide, please. So here, we see an encrypted device. So let me do some comments on encryption and security, which is one of the most common questions that I get, which is obvious because there is a debate in media and everything about encryption and secure phones and can you get or not get access to different devices. As we saw on the steeple that's called other, that has had the strongest growth for the first 9 months. A lot of that growth was related to -- are related to our improvement of getting into the most advanced different types of devices. But let me also explain that because I get some questions sometimes. Well, can you get into a Samsung? Or can you get into XYZ type of device? And I might at that presentation say yes, we can under these circumstances get access to that information. And so -- but what is also important to know is that this is an ongoing work even for current devices. What I'm saying is that even though we can get access to it, software and everything, updates and everything changes so fast on each and every device and also on different apps that we are constantly continuing to improve and catching up and being in the forefront of getting access to these devices. So sometimes, we don't need to do work at all for different devices when they change software, but sometimes, we need to put a lot of work into that. But bottom line, we have shown for the past almost 20 years now, our strength in getting the data from these devices. If we don't get the data out of these devices, everything else becomes worthless because then you don't have any data to deal with. And I would claim that we are absolutely on top of this even competition-wise globally. We are very strong in getting data out of all types of different devices. Next slide, please. Speaking about getting data is the most important thing. So one challenge of that is that -- getting the data from encrypted devices, as we saw in the previous slide. The other challenge is to handle the volume, the amount of phones that's been confiscated or being of interest to extract information from. So what we have delivered now for the past 6 months is our version 3 of the MSAB Kiosk. The reception had been tremendously good. I think personally, it looks great. But not only looking good, it also performs better than ever. So we have started to deliver this one, and we see how people now realize the value of decentralizing the -- or offloading the work from the forensic labs by going through these kiosks. So I would say that MSAB has probably delivered the highest amount of kiosks globally. But that said, I think there is still huge untapped potential for this type of solutions. Next slide, please. But it's not only getting the data that is important. It's also -- I would say as important as this, to get the data, is also to find the correct data, find what you're looking for. And here, we have done good improvements in our XAMN AI solution. AI means that we can now do smart filtering. We can make sure that the customer finds what they're looking for without needing to browse through each and every entity or -- of this device because there can be hundreds or if not millions of different entities in a device. So what we have performed with XAMN AI is a way to just have a smart button that tells you what you're looking for, and we will filter out that for the investigators. They can find probable cause of suspicion in different devices. The reception of this has also been very good, even though we see that the sales is not taking off as fast as we would like to see. But if I look on the pipeline, I'm very positive that we will see a different -- or I would say we'll see an increased growth for this XAMN solution that we have. Next slide, please. So now we've seen 3 -- I've talked about encryption. I've talked about the Kiosk. I talked about viewing data. But what actually really ties these things together is our unique XRY file format. The XRY file format is actually something that we originally developed when we started with XRY in 2 -- back in 2002. What value does the XRY file format give the customer? Well, probably more than ever. And it's not only that it secures the information in a compressed and encrypted file format so you can be sure to have 100% traceability and the chain of custody, it's very important for the courts that the evidence is untouchable from being extracted all the way up to court. But it's not only that. It also generates speeds. This is a micro or like -- I shouldn't say micro, but it's a database that is indexed and everything. So the speed from when you have extracted information to make sense of it is best in class. There's probably no other tool that can make it so fast as XRY can do. And if you then consider how many phones they want to do and how little time they have, our customers, this becomes even more important. So we believe we see now that the value that these things like the XRY file format adds is -- are becoming more and more important when you make different decisions, what type of tools you're going to use when other things are alike or whether it's -- or at least close to each other. Next slide, please. So speaking about the file format. I mean just to give you a little recap, I mean, this industry is pretty young or maybe not even young anymore. But we started 2002, and we were first out in this industry. And it was not Wild West, but there was absolutely no standard. This was just about, "Okay, how can we get the data out of these devices?" And -- but rightly so, this has caused interest now from different organizations and different things, that, "How do we do this? Is it done in a correct way?" And in just the past 6 months, there has become several different reports from European Union, from different police organizations, either single ones or jointly working together. But what is important here is to highlight that the standards that -- or tools that they're using is increasingly important to be able to use this evidence in court. And I can say that MSAB is probably the best one to follow these standards by architecture. Going back to the file format, going back to how we extract information, going back to XAMN AI, all that follow -- or not only follow, I would say, is leading to these type of different standards. They see that there is capabilities of doing this. And this is just a small shout-out from recommendation. Keep the software they use for mobile phones extraction under review. Very important, of course, you should do that. We test and try every day what is that we claim that XRY can do for them. We probably have the world's largest archive of different devices. We have tens of thousands -- more than 10,000 devices in our care. So I shouldn't say tens but thousands. They maintain a privacy by design and default approach. Privacy by design, going back to XRY file format once again. XRY file format, it's impossible to alter the extracted data. You can filter, you can sort, you can create subsets, but you can never ever alter the data. So you need to make sure that you know what you're dealing with, not only from what you can get, but also how that data is being handled. Next slide, please. So the background of all these reports and maybe -- I should say, the latest one that came out and the very important one is the ICO report, Information Commissioner's Office in U.K. As you can see on the comments here that a lot of things that is dealt with in our industry or how these things are being dealt with is based on laws that were made or standards that was made before cellphones were. Well, this is important. So it needs its own type of standards, these devices themselves. It has become the #1 tool in securing evidence. So it earns its own standards and reports. And we can see that these are coming now. And once again, this is to our advantage because we are the ones that have developed this by architecture to be secure and following the most -- or I should say, the highest demand that you can have on such tools. We put very high pride in making this secure, not only for the police but also for the suspects. We should know that this is serious type of evidence that's being used, so therefore, the tool needs to be 100% correct and secure. Next slide, please. So as I said, we do constantly improvement in what we're doing. MSAB is like a machine of software. We produce so many new software. It's probably more new releases than a lot of other companies. I can't think about any other industry that do so many micro and major releases as we do. Just for the last quarter, we have done 4 major releases, both with XRY, with XAMN, with the Kiosk solution and with the XEC Director. So you see just a fragment of all the releases that we do all the time. So we have a great team producing these releases all the time. We need to do that. We need to continue delivering value to our customers. And this is why we see that we constantly increase our sales and especially that we can see that the sales of license renewal increases, which means that customers that buys into our products are so happy with what we perform that they continue year-over-year to renew their licenses. Next slide, please. So I said before that the COVID situation impacts our way of working. But that said, we continue to innovate the ways of interacting with our customers. On this picture, you can see how we have built up a studio in our office where we do webinars. This picture is from a partner conference that we had just a couple of weeks ago, and it was a 2-day session with -- a 2-day long conference with different types of sessions. And it was very, very well received. We had 9 point -- I don't know, 9.5, 9.6 out of 10 grades overall in performance of that one. So what we have said is that we don't cancel any meetings. We just reallocate them to do them digital, if we can't do them. But that said, of course, being interactive has its limitations. We would love to go back to in-real-life meetings. We believe that, that will help us increase the speed of new projects. We know there is a lot of progress going on that have been either postponed or slowed down due to the COVID situation, either because they can't meet suppliers but also that they not even can meet internally or travel through borders, even borders within different regions. So that said, we will continue to improve our way of working as long as needed. And when these strict travel restrictions period is over, we can change our way of working. But I wouldn't say change back to exactly what it was before COVID either because we have learned a lot of great stuff as well. This has forced us to improve our way of being innovative in interaction with customers. So it will be a great mix after that. But once again, in-real-life meetings will increase new sales faster than we are able to do during the COVID situation. Next slide, please. So you have heard me talk about how much we improved and doing good under these circumstances. We produced not only good figures, we produced good products and such. But what do our customers say? Well, this is just spontaneous customer feedback from different types of social media. This is not feedback -- we got a lot of that as well, feedback directly emailed to us. But this is just social media highlights how great it is to work with MSAB. And I'm very proud to have the staff that we're having. It's our staff that actually does a tremendous good work of maintaining, supporting and updating everything we do and in the total interaction with our customers. So I can say that we have very, very good relationship with our customers. They really appreciate what we're doing. And this is also a thing the motivates you in doing better every day. So once again, the customer feedback is tremendous. We love it, and we love our customers. And not only that, when they perform good, they also create a safe society, so that's an extra bonus on top of that. Next slide, please. So last but not the least, as I used to say, we should treat our customers as heroes, as the heroes they deserve to be treated as. Because if we help our customers to improve their way of working, they will not only buy more from us, they will also create a safer society. So thank you for listening in. And me and Daniel are ready to take questions now after this presentation. Thank you so much. Thank you so much for listening in. Bye-bye.

[Operator]

[Operator Instructions] We have a question from Daniel Thorsson from ABG.

[Daniel Thorsson, Research Analyst]

Yes. I'll start with a question that you mentioned in the very end around new sales. So I guess that new sales are down obviously versus last year because salespeople can't do the sales activities they usually do. And that leads to lower costs and hence, better profitability short term that we see in the P&L. But is there a risk that the decline in new sales will affect the coming quarters' revenue negatively if renewals don't catch up enough that we have seen them doing now? Is there a risk of that?

[Joel Bollö, CEO & President]

Well, it's a good question, and it's a speculative question. I mean we have to look probably in the past. I'm not worried that license renewal will go down. We haven't seen that. I can't even remember when we have had downturn in license renewal. And as I just presented, based on the feedback that we have from our customers and the journey that we are doing right now in terms of improvement of performance, I think that risk is pretty low. Regarding new sales, this is -- I mean it's hard to know about the future. But as I tried to explain in my presentation, is that customers have it harder to run into larger projects, to bigger projects or keep up temper in those based on the restrictions. And they even have other tasks to do, not only that they can't meet. There can be other reasons for it as well. But if I compare to the figures I've seen from competition, we overperformed in our industry compared to the others, so it's not that we are losing this. We seem pretty comfortable about the future, both on new sales and renewals. But the longer we can't meet customers, that might have impact, yes.

[Daniel Thorsson, Research Analyst]

Okay. I see. That's fine. And then secondly, on the picture you had with the sales in third quarter, where we saw a doubling in other revenues, and you explained it had to do with the advanced analytics for the latest products. Is that a temporary trend that we see now? Or is that something that could grow sustainable going forward as well?

[Joel Bollö, CEO & President]

That can absolutely grow sustainable. But like everything I tried -- like with everything in our industry, I mean, there might be quarters with up and down, but absolutely, that's a sustainable growth.

[Daniel Thorsson, Research Analyst]

Okay. So it's nothing that has to do with the pandemic that makes them use this kind of technology solutions more than before or more than in the future as well? Or...

[Joel Bollö, CEO & President]

I see. Okay. No, no, this is not related to pandemic. Maybe the pandemic was -- yes, we could maybe do even more on the advanced acquisition thing because we could easily receive stuff and sell even more of that. So I would say probably the opposite. We can sell even more during the pandemic as well.

[Daniel Thorsson, Research Analyst]

Okay, okay. Good. And then a question on the organization. So historically, Q3 has had some 7 to 8 people more employed versus Q2 as you have ramped up the organization for a couple of years. But this year, it is more flat. It's only up 1 people. Should we see that as a sign that the largest ramp-up is behind us? Or are you still looking to hire more people across the business?

[Joel Bollö, CEO & President]

My answer to that one is, I mean, we have ramped up pretty much in terms of -- staff-wise the past 2 years. And what I said before is that now it's -- I think we have an organization that has the capability to do the higher sales that we see right now. So we can increase the sales more than we increase the staff. But that's -- hopefully, we will increase the sales and profit so much so we need to increase the number of staff as well, but not in the same sales as we have done for the past 2 years. So that's correct.

[Daniel Thorsson, Research Analyst]

Okay. Excellent. And then this final question. How much of the lower costs, except personnel costs, are sustainable going forward here? They are down quite dramatically.

[Joel Bollö, CEO & President]

Yes. But if you see -- personnel cost is not down, hardly at all, if you look on the figures. It's the other cost that is down. So...

[Daniel Thorsson, Research Analyst]

Yes, exactly. I mean that, except for personnel cost, so the other cost. Correct.

[Joel Bollö, CEO & President]

Okay, okay. I misunderstood, sorry. Yes, the other cost. I mean that is, of course, a lot related to not traveling, not doing trade shows. And that's -- so that said, I mean, I think I had a question from somebody. Well, is the cost going to come back so the margin gets lower? No. I mean we learned a lot from this. We can interact, we -- so this situation will not only be -- and as you say, it's not definitely not just negative. We learned and our customers -- not only us, our customers learned how they can also interact with us as suppliers, even new customers. So this will change our way of working whatever happens due to the pandemic, which means that we can run the company, let's call it, more efficient. So we can do more sales on the same number of people due to change of work. Those -- we learned, but also, our customer learned how to interact with suppliers in that then. So I -- we can count on that we can get out more per salesperson in the future than we've done in the past.

[Operator]

We have a question from Viktor Högberg from Danske Bank.

[Viktor Högberg, Analyst]

So on the outset, you stated, using your word, that it takes longer for customers to make decisions, partly on the current pandemic. But it's my impression that this has been the case for the past year or so. Or do you feel that it has changed on the negative side of late on the customer decisioning? Or is it just a general comment on your niche in this industry?

[Joel Bollö, CEO & President]

No, I mean with -- I mean this is very specifically -- I wouldn't say -- I mean there is always things that might be late and such, but it was specifically in Q3 when a lot of federal government is usually -- we had good sales. But I mean there are some projects that we've been -- that we are into that has not happened, and that is directly related to pandemic. And it's -- we had in local currencies, I mean, 9% growth or something. But we have probably been -- I wouldn't speculate, but there have been even more growth in local currencies if it wasn't for the pandemic. And we can see that -- and can't point out exactly which customers but we know specifically which project that's being postponed or put on pause because of this.

[Viktor Högberg, Analyst]

Okay. So would it be too optimistic to expect it to come in again now in Q4? Or is it a comment that relates mainly to a delay maybe into '21?

[Joel Bollö, CEO & President]

I would say it's absolutely related to 2021 -- it depends on the pandemic. I mean this is absolutely related to that some of these things require traveling setups. So it's not just shipping products. And this cannot happen, not only on us but also internally for the customers. So as long as the pandemic is there, these things will not happen.

[Viktor Högberg, Analyst]

Okay. So you've shut down your Hong Kong business. It's been reported before the quarter was announced. Could you say how much Hong Kong revenues amounted in 2019? And how much in Q3?

[Joel Bollö, CEO & President]

I mean we didn't do any business in Q3 in Hong Kong, if that was the question.

[Viktor Högberg, Analyst]

Yes. So how much was it in Q3 '19 then, if we can get something to compare with?

[Joel Bollö, CEO & President]

I don't have that figure off of my head, but you can say that Hong Kong business is just a couple -- it's been a -- I mean it has no significant impact on our revenue that we had. I mean then it should have been something that we thought would have had impact on the stock. So it's pretty low numbers. I don't want to say exact number because I'm not sure exactly what it was in 2019. It might have been it's less -- I would say, less than 1% of the total sales of the company.

[Viktor Högberg, Analyst]

Okay. And it's mainly on license renewals, I would assume. So speaking of renewals, in Q3 2017, you took a SEK 19 million order from a European customer, a 3-year contract. Was that renewed now in Q3 or parts of it? Or was it renewed early? Or is it still to come?

[Joel Bollö, CEO & President]

It's partially renewed.

[Viktor Högberg, Analyst]

Partially as in partially renewed in Q3 and more to come or something before? Or...

[Joel Bollö, CEO & President]

Yes.

[Viktor Högberg, Analyst]

Okay. And just a question on the competition. You seem -- kind of forward-leaning presentation here with a lot of product focus. You think you're strengthened in your competitive position and that you've taken market share in the last couple of periods. So what do you see from the competition? Could you elaborate a bit on where you feel that you're standing in this competitive landscape going into '21 and also for the next 3 to 5 years? Big question.

[Joel Bollö, CEO & President]

It's a big question. I can't say 3 to 5 years. The industry moves so fast. I mean -- maybe I can do it, but I don't want to -- I'd avoid doing it in this forum, to be honest. But what I'm saying is that we improved and that's -- we improved, I mean, what is maybe -- not maybe, what is probably the most important thing for our customers. I mean that is getting the data. As I've said in my presentation, is that if you don't get the data, you can't make sense of anything. So what we do is that we are improving our way to getting into the most advanced phones, and this is not easy. The value to getting into -- get data out of the most advanced and modern phones is just increasing. And that's why we've chosen not to put that into XRY standard. We put it into our advanced acquisition lab thing. And that is the increase of sales we saw under the -- what we now -- maybe change for future, but at least we have it there for now, in what we call other, which is a significant growth in that one and expect that to grow even more. We can probably even raise the prices on that one because the customers also understand the value of what we do. I mean what we did 10 years ago, getting into a device, the way of getting into a new working device now is significantly higher. We have to do more investments. But we also take more money for it already now. So that goes hand in hand. And I can say that we are catching -- I shouldn't say catching. We are delivering very strong solutions on the most popular phones such as both iPhone, Huawei, Samsung, LG and others. That said, I mean, there is no tool and I'd say 0 tool that can, in any condition, get into all devices as of now because this is a moving target. When a software is changed in a device, we have to catch up and to chase that. So it's a constant work that we need to do. And this is what I've been -- well, I'm proud of that. We have now built up, the past couple of years here, a really, really strong research team that performs. And that's what I was trying to explain during my presentation as well, that we probably performed better than ever right now.

[Operator]

[Operator Instructions] We have a question from Matthias Durner from Discover Capital.

[Matthias Durner, Senior Equity Analyst]

Most of my questions have been answered. Just following up on the customers' behavior just to understand their, let's say, obligation to or need to spend their budget this year. Can you give us some insight regarding -- are sort of government and institutions giving police forces and other forces more leeway in spending their budget maybe in Q4 or more in 2021? Because if I understood correctly, normally, they have to spend amount X by date X. Otherwise, they will, of course, get the lower budget next year because they didn't spend all. Joel, can you hear me?

[Joel Bollö, CEO & President]

Yes, yes. So if I understand, you're asking if the customers are forced to spend their budget as normal or if they can use it later. Is that the question?

[Matthias Durner, Senior Equity Analyst]

Exactly, exactly.

[Joel Bollö, CEO & President]

Well, there's not a simple answer to this one. You can say that it varies a lot in different regions. So it's not just one answer to that one. But budget spending, not spending, I would say that it's not a big difference. I mean COVID has not had a big impact, from -- to the best of my knowledge, in terms of how the police budgets are being spent or not being spent. It's more local trends. You can say, for instance, more specifically Sweden nowadays is throwing money over the police in Sweden because they think they under-invested in the Swedish police for the past 10 years or whatever -- in the past, I would say. And now that -- as you'll remember, the Swedish police is well funded now and is going to get more money. So that's good. While -- for instance, in U.S.A., what is called Black Lives Matter is the trend now, I would say, defunding the police, withdrawing money from the police and spend those money on social welfare instead. So there's no general trend globally based on this, I could say.

[Matthias Durner, Senior Equity Analyst]

Okay. So no effects from this side? It's rather, as you explained earlier on, travel restrictions and that projects can't start or customers need longer on their decisioning, but it's not about any budget and so on?

[Joel Bollö, CEO & President]

No, no. Exactly. That's -- okay. No, I understand. No, exactly. No. The reason is they don't -- they prolong the ongoing or the forecasted projects that we are into. I mean they're not really stopping. They are maybe paused, but they are not canceled. That's more related to that. But it's not a budget-related thing, no.

[Operator]

There are no further questions registered, so I hand back to the speakers for any closing remarks.

[Joel Bollö, CEO & President]

Okay. Thank you so much for listening in and for your questions. If you are -- come up with some other questions, feel free to reach out either to me or Daniel afterwards. And once again, thank you for listening in.