RTX Q4 2025 Earnings Call - Clear Path to Double-Digit Growth with Focused Healthcare and Retail Expansion

Paul Jason, Analyst, Danske Bank: Good morning, Rian and Jure. My name is Paul Jason, analyst at Danske Bank. We are here together today with Henrik Mørck, CEO of RTX, and Mille Trampe Lux, CFO of RTX. We will go through the Q4 numbers, which were out yesterday. Henrik?

Henrik Mørck, CEO, RTX: Yeah, thank you very much, Paul, and welcome everybody. I hope you’re all fresh and ready, and if just let me know if you have any questions, we can definitely dive into those. I just prepared a short agenda. Just a short introduction to RTX. One of the elements that we have been working very diligently with through the last, after my onboarding, is really to get a deeper understanding of the markets and the opportunities that we’re in, enabling us to set some targets on a longer term. I will also give you a walkthrough of our five-year ambition, including some selected insights on what we’ve been able to achieve with our healthcare businesses and what we are looking ahead for, and the same for retail to our growth opportunities. Mille will walk us through the financial and business highlights, finishing up with the outlook.

Of course, there’s room for Q&A as well. Very quickly, RTX on a page. More than 30 years of experience in working with short-range wireless technology, deploying it typically where standardized infrastructure such as cellular Wi-Fi isn’t there or doesn’t meet the quality standards. That’s where our technology fits in. That’s what we are framing as challenging environments. We deploy that technology in three major markets or three major market segments as we’ve defined them, the enterprise, broadband, and healthcare, where we innovate, design, manufacture solutions. For example, in enterprise, that’s where we do headsets, handsets, base stations for office and retail communications. Picture there, you see a push-to-talk headset, which if you go into Netto, you’ll see one of those, and that’s RTX technology there.

Healthcare, where we do secure, highly reliable wireless infrastructure for monitoring of critical patients, where our main market is in the US, and enabling basically a positive business case for hospitals in utilizing the clinical staff even more efficiently because you can monitor patients centrally as well as catering for patient safety. Then we have broadband, where we deploy our technology, not as full products, but as a module that allows our customers to build that into their solutions, where one of the focus areas for us is defense and first responders. For example, firefighting teams that have the technology built into their helmets so they can have hands-free, ease of use, reliable communication between teams in tactical environments. That is what we do. The business model is that we really focus on the design and the development and production.

We have partnerships with global brands that bring our products in their name to the global market. These are brands that have been our partners for more than a decade. It is really long-term partnerships. That is really what is allowing us to deploy our technology globally. That was a quick RTX flyby. The five-year business and ambition. We have really scrutinized our existing business, understanding our position, the market trends, really giving us a solid foundation for setting our ambition and what we strive for during the next five years. First of all, looking at the market trends. We are definitely seeing a positive trend for our business in the increased need for mobility under the headline of anytime, anywhere. The number of wireless devices is significantly increasing. Specifically for our opportunity in healthcare, we are seeing aging population.

Our technology is used for monitoring cardiac patients at hospitals. In the U.S., according to the American Heart Association, the number of cardiac patients is going to rise by more than 30% during the next five years. That is definitely driving a need for continuous monitoring while balancing or while requiring a more efficient use of clinical staff. Geopolitical tension has a good side and a bad side. The bad side is definitely that it is a challenging environment to do business in on exchange rates, on trade barriers, and so on. That is something that we need to cater for in the way we do business. On the other hand, it also drives investments in defense and emergency communication, both in first responder type applications, but also in tactical teams. We are seeing some positive developments in that again. Then continued digitalization.

The integration of voice communication, not only to carry voice, but also to capture data, to gain insights on operational efficiency, for example, on the shop floor, is definitely also a trend driving deeper integration of our solutions into cloud-based solutions. That was just a subset of the market trends. For many reasons, but also for really catering for the geopolitical stability and the effect on the business environment, we really value our low asset or asset light setup where we utilize EMS production partners with major partnerships that allow us also agility in terms of moving production in and out of, for example, China, which is definitely a trend and has been for the last five years.

Also utilizing the partnerships that we have with the major B2B customers, bringing our products globally and giving us a sales reach that can be really, really hard to reach having 300 people working for RTX. They really provide us some reach where we have a call on the market insight and the technology leadership. The ambition, putting it into numbers, definitely, our ambition is an ambition not only on growth. We are definitely targeting double-digit growth throughout the next five years, also acknowledging that we are at a point, even though what Mille will cover, we have again thrust into being a profitable business, and we’re really, really happy about that. We want to set our targets higher. We are targeting an EBITDA margin above 15% in 2030, which I believe is quite ambitious for a company like ours.

It is a journey not only on growth, but also on profitable growth. That is built on we have a core business, our enterprise business constitutes today 75% of our business. A core market for us, also a relatively stable market, but a market we have a really, really strong position in. We are investing in that also to keep that. We are investing in what we call our next generation platform that will enable a higher degree of reuse across customers and businesses, but also shortening time to market for onboarding new customers. That is a major investment, and we are looking for that to start making impact within this frame of 2030. We have two growth verticals. One is retail.

I shortly spoke about the push-to-talk headsets that you can see in Netto, Bauhaus, or JYSK, but that is, it’s a sign or it’s actually a testament of a transformation happening not only in Europe, but also in the U.S., where the retail store changes not only from a point of sales, but actually to an omnichannel setup where it’s also basically a warehouse for the online channel. That requires different communication, different logistics at the shop floor. There we see really a strong push for mobility solutions for frontline workers. We’ve seen a lot of growth on that in Europe, and we are seeing a potential market on that in the U.S. as well. In healthcare, we already have deployed our technology, the wireless infrastructure for critical patient monitoring. It’s deployed in more than 1,500 hospitals in the U.S., holding a 40% market share.

We see clear opportunities for expanding that application for critical patient monitoring from the specialty wards, but also broader to the hospitals. On a longer term, we also are looking for additional growth markets. That is definitely a growth engine for us. Also, healthcare is a high-value market, which also will help us drive the EBITDA margin over time. Of course, we are also looking into that, the trick of RTX. We have technology that can be deployed in many markets, and we are definitely continuing to look for that. Defense is one we have seen positive traction, and we will keep doing business development to cultivate new applications of our solutions during this time frame as well. That is the foundation for our ambition going to 2030. Just some insights on the two growth opportunities, where are we today?

On healthcare, we are executing according to our plan, to our ambitions. We have seen this year solid growth, both in revenue and also expanding gross margins. Really happy about that. It is a testament that we are tracking on the right route to a long-term sustainable business in healthcare. We have spent a fair amount of time understanding, interviewing decision-makers, understanding technology trends in the US market, and also understanding the size of the US market. Really, for us, it is a strong sign that we have been able to validate our assumptions, but also identify key adjacencies on how we can help our customers expand the footprint of our technology. We, I think, earlier spoke about the USB dongle as a way to expand our footprint, and we have seen some strong indications of adjacencies that we can pursue there.

Working closely with our partner, Philips, on that and really strengthen that. That is basically where we are. What we will do to really put the pedal to metal on this, we are going to invest into the organization. We are bringing on a new SVP for healthcare to provide even more focus on both execution, but also bringing in experience from having lived 10 years in the US, working in med tech, detailed insight and knowledge on how to commercialize in the US market. Looking really to strengthen our leadership and, in general, investing into our organization, building the capabilities not only to deliver on the opportunities at hand, but also really to build a long-term pipeline of opportunities within healthcare. Right now, the US is definitely the priority and will be the main priority for this horizon for the next three to five years.

We are definitely looking also for growth adjacencies and markets in healthcare. Yeah, that’s where we are on healthcare. On retail, the second growth vertical that we’ve touched on a number of times during this course, we have seen this year and year over year solid growth in revenue, really a testament that this transition is happening very much in the EU. We are helping transforming the frontline operations with better customer experience through advanced wireless technology. We have partnerships with the market leaders, really much focusing on the EU. We’ve also invested in understanding both the EU market, but predominantly the US market, because it’s a major market and the technology transition is starting up there.

We definitely want to understand how can we better grasp that, how can we build with both existing, but potentially also new partners, building that, grasping that opportunity. For that reason, we’ve also focused our leadership to really drive both the execution of this, but also the business development within this area. Looking ahead, our clear focus is going to be Europe and the US, continuously, of course, understanding future growth markets as well. That was the relatively quick flyover of both the five-year ambition, also the healthcare and retail. I want to hand over to Mille to walk us through the annual results. Some of you might have read the report already, so I’m going to do it relatively short, and then we can take questions.

The main headlines for the year is that we have regained profitable growth, which you can see in an increase in revenue of about 10%. We can see that we’ve got strong performance in our core segments, our focus segments, enterprise and healthcare revenue, which both of them grew significantly compared to last year. We have been very focused on our product profitability and gross margin, and what we can see is that we have driven up our gross margin by 3.3 percentage points over the year. Other focus points that we had was our inventory reduction, where we have reduced that to DKK 37 million, reaching a level which is a more right level for RTX. We have, as a result of both inventory reduction and better operational result, strengthened our liquidity position, reaching just above DKK 150 million by the end of the financial year.

It has also been a year where we have worked on our Scope 3 emissions. When the year started, the regulations on this point were one, and now it is another. We remain committed to sustainability and responsible business conduct. With the new legislation, it will allow us to focus our efforts on actions more than reporting. Of course, we have made a foundation in the reporting in order to understand where our main focus areas are. Another big change in the year, of course, is the leadership transition with Henrik Mørck in the position joining 1st of March. We have also already seen quite a few changes as a result of that. If we dive into the three segments, enterprise, as we have seen, has obtained quite a strong growth during the year. We have a good solid order book.

We can also see that the distribution of revenue between quarters has been much more stable this year, which indicates a more stable planning from our customers. It allows us to have higher operational efficiency as it allows us to plan better our production. Preaudio reached a level below our expectations, and some of it is due to lower volume and longer onboarding time for some of our newer customers, module customers. We have focused on driving the profitable products in Preaudio, and therefore this year has also been influenced by closing down of full product together in good cooperation with our customer, because keeping this alive is not sustainable for them or for us. We do see growth potential in Preaudio, particularly in applications like defense. As everybody knows, this is a market with big potential, but also longer-term decision points.

We are working committed here to gain good foothold with key partners in this segment. Healthcare, we have revenue from these key infrastructure products that we are supplying to our partner for patient monitoring devicing. We are investing in execution of our product portfolio together with our partner and building up the order book. We are progressing together with our customer in the transition to full product ownership, and therefore also a different price point and a different commitment level to product sustainability. Yeah. All of this sums up to revenue for the year, reaching just over DKK 550 million compared to DKK 500 million last year. Here you can also see the distribution across quarters. Of course, as every other company working in the USD area, we have been impacted quite significantly by the decreasing dollar in the last half year.

That also has had an impact on the full year result. First half year, cost of development, last half year, negative. If we look to our gross margin, we have maintained over the year gross margin at around 50-51%. That is primarily driven by the facts that I stated earlier on focusing on profitable products. In the last quarter, it is impacted by a write-down of inventory, as I mentioned before, in the broader segment. This is, of course, reflected in our EBITDA, where we have lifted that to DKK 36 million compared to DKK 3 million last year. It is a clear focus for us to remain and increase our profitability. Other key financial highlights, as I mentioned, are cash or inventory, where we have reduced that.

Our free cash flow, which is in this year impacted both by, of course, operational result, but also significantly by this inventory reduction, resulting in a net liquidity position, as mentioned before. Outlook, I will leave you to say a few words to that, Henrik. Yeah. The Outlook, yeah, it is up here. The Outlook is DKK 575 million, DKK 25 million. Top line, it is reflecting basically an underlying stable return to normal in enterprise with opportunities for growth very much in healthcare and in retail as part of enterprise, but also a return, a comeback for Preaudio result will drive top-down growth. Of course, this is also impacted by negative exchange rate and headwinds on foreign exchange rates, reflecting that. EBITDA from DKK 35 million-DKK 65 million and EBIT from DKK 0-DKK 30 million, really also showing a positive expectation on development on profitability.

I think this is a financial year where, again, we take a step up both in terms of top line, but also profitability, while also investing into future opportunities, specifically in healthcare, but also in our next generation platform for enterprise, both in terms of product investments, but also in our organization bringing on board new key positions to drive future growth. Yeah, that’s basically the framing about our financial outlook. I think let’s open up for questions or comments. Yeah. If there are any questions among the listeners, then just raise the hand. I think could you stop sharing because then they also get a larger picture of us. There we go, I think. Yeah. First question from me is just focusing on the strategy. You’ve been there 10 months now. This is the first strategy plan, which is your responsibility.

Could you elaborate or put some words on, has there been any adjustments of the strategy when you entered, or have you put your fingerprint on the way where you think, "Here, we shall invest. Here, you should cut down, add resources"? I think from a very, very high-level perspective, the strategy is still the same. Our pursuit to really be driving platform investments so we can utilize our technology in many different applications. I think what my input or drive into this has really been two key elements. One or three key elements. One is getting a solid understanding of the markets and the market dynamics that we’re in, because that’s the backside of our business model. The good side is that we have a strong sales force with many of our customers and great partners. It also puts us some distance between us and the market.

Really getting a solid understanding of the market trends behind both enterprise, Preaudio, and definitely healthcare. Make sure we have a solid plan or a solid understanding. The second is really about execution. It is about building the plan, but also making the right investments, as we are doing with the organization in healthcare, to really make sure that we also have the capabilities and the ability to execute on the opportunities that are out there. I think the last element that really is more visible for us in this is really about focus, also about being focused on where we actually see the growth, where we deploy our time and effort, but also investments to really drive that growth.

I think it’s, from a very high perspective, no, it’s actually the same strategy, but when you get into the details, it’s more basically about connecting the opportunities with our abilities and to make sure that we can actually also deliver. For me, it’s important that it’s a good balance between opportunities and risk in what we pursue. I like to have more opportunities than risks because that puts us in a position also to manage a challenging world. I think that’s my perspectives on that. If you take healthcare, because that’s an important earning driver going forward, and you add competencies into execution here, can you be specified? I think you have one client, more or less. Yes. And you are not the one selling to the hospitals, delivering what they sell.

What do you have to add when it’s, in principle, to be an account manager for a client? This is basically, again, taking it back to basically what’s our ambition in healthcare. Our long-term ambition in healthcare is to have a broad, diversified portfolio within healthcare. We have a strong belief that the general healthcare market is an attractive market, and there’s a technology fit for short-range wireless technologies. There’s a lot of applications for that. The Polaris agreement that we have with Philips is one application of that. It’s also quite significant, and it’s definitely for us a strong way into that. The reason for us building in and what we’re bringing in is not only account manager.

We have put in that we need to, of course, execute and deliver with Philips on that business, the agreement that we have that will bring us to a certain level, but actually building a business development pipeline beside that. Because over time, of course, we want to have more customers than just one customer. We want to have more and a broader product portfolio. This is not just a one, two, three-year, five-year ambition. This is actually for us a commitment to saying we want to build a broader sustainable business in healthcare. That is going to both take time and funds. On the good side, we have actually a way in alongside with the product portfolio that we already have and the agreement we have with Philips. You have tried to plan two segments where you put special focus retail on healthcare.

Retail, it’s EU, I guess it’s decided by the client because it’s EU-based for now. And Philips, it’s US you’re talking. Why is the healthcare and Philips not also Europe, or Asia, but only US and then in retail? Yeah. Are you dependent on Vocovo entering the US or other markets, or can you go to the US and find a similar provider? Yeah, there are two questions. If we take retail first, that’s also part of the work that we’ve been doing in really understanding. I think we have a fair understanding of the transition going on in EU, also with our partner in there that we’ve seen strong traction on. The research we’ve done is really actually understanding the US market because we are seeing that in technology shift, it’s actually a trailing market to the EU.

It is starting, and it’s an attractive market in that respect that it’s bigger change. In the EU, you have to do more sales because the change, the franchises are simply smaller. In the U.S., it’s larger. It’s basically our understanding who are the players, what are the value propositions they have, what are the value fit with us. That being said, to understand how can we best grab that opportunity. That being said, our current partner is also pursuing a U.S. strategy and have entered and have some success in that market. That’s definitely also a part of our ambition, really to have a footprint on that. We’ve done research, and we are right now building the plans on how best to attack that. That’s part of our ambition. When they go to the U.S., is that based on your product then as well?

You asked Philips and EU. The application for this is the business environment for these applications is just simply better in the US. It’s about the financing model. Our application does critical monitoring of cardiac patients. There’s a reimbursement number for that in the US. There’s a direct money flow on that. That’s the key focus of there. There are deployments, and there are applications of that of the technology, both in the EU, but also in the rest of the world. The economic incentives are just so much clearer in the US. That’s where both our and Philips’ focus is on that. It’s not cutting off the other opportunities, but that’s where key focus is at the moment due to, yeah, the financial incentives of the US healthcare system.

If you look at once a year, you give the top, those who have revenues of more than 10%. Not by name, but if you add the numbers, then I calculate that 60% of your enterprise revenue is on three clients. At group level, 56% is on four clients. Are you happy with this concentration? It also tells us that if I look back to pre-Corona, then because one has come in, then at least one has left the top 10%. How is the structure between the clients from pre, all the turmoil, and now? Are you having the same relationships or are there clients who have during the last four years scaled down or? There are movements in our client portfolio. There are movements, but I think it has been relatively stable. It’s ups and downs.

I think you’re also alluding to the point that this is definitely also something that we’re continuously pursuing, which is diversification in our customer portfolio. Are we happy about the mix? We’re really happy about our customers, and we value that partnership. Of course, looking at it from a business side, from a resilience side or risk side, this is definitely something that we’re also pursuing in our ambition, really to get a broader footprint in the markets that we are in with also a more diversified partner portfolio. Now you have the entry into 2025, 2026. Are channel inventories at the start of this year to normalize? Now it’s business as usual or as in old days, or is there still something that has to be solved in this year? We are seeing normalized levels.

You probably find one customer who has big stock, but you’ll always be able to do that. I think we’re actually seeing right now the flip side is that we are seeing our customers keeping very low inventory levels, which is definitely challenging our operation because that means low lead time orders, pop-up orders. More or less, we can take the Q4 performance and, for instance, enterprise and use that as a starting point as an annualized run rate for the business. It’s always difficult to predict the future with the past, but I think that we are Q4 is a normalized level for most customers. Yeah. Okay. If we then move to the long-term ambitions, I’ll just back in my notes for previous long-term ambition. Then it was 13-16%. Then it was more than 10%. Now it’s more than 10%.

If I do the math based on that, you had an additional DKK 1 billion. You reiterated the DKK 1 billion, I think, in June in an interview. That was something that you could see in the future, or you would not eliminate that one. If I do the math just on 10%, you are at DKK 900 million in 2030. You also take margins down from 18%-20%, then to more than 18%, then to more than 16%, and now to more than 15%. Are there any changes? At the same time, you get a more profitable business unit into the equation of the group. Are there any changes here, or are you putting much stress on the fact that it is a minimum? Because sitting from the outside, I could pick any number when it is open-ended on both.

I could say 20%, that’s double-digit on the growth. Could you put a little more flavor on what should take it above the minimum? What is a level where you say this is out of question? I think, yeah, yeah, yeah. I think what you’re alluding at. I think actually back to the point that what we actually tried and really be diligent about is really to understand what are the market drivers, what are the market dynamics, and how can we best capture that and make sure that we basically have more opportunities than risks in the way we project and the way we execute? That typically gives, I think that’s my strong beliefs, it gives better long-term results. That’s what we’ve been doing.

I think the underlying, and maybe be a bit reluctant to compare to earlier because I wasn’t part of that, but I can just say what we’re seeing is in the enterprise market, it’s a you could have had a concern going through COVID, going through supply chain changes that there would be major shift negatively in that market. We are seeing a really stable market in that. Lower one-digit growth margins, growth, it’s kind of a flat, kind of a stable market. We are seeing growth verticals like retail that we’ve been able to capture. We also see we have a strong position where we believe we can do an above-market growth in that due to our position because we are within basically 8 out of 10 major players in the market. There’s still some to go. That could be an upside, definitely.

There are opportunities, of course, also if US retail really takes off, that could be an upside. There are upsides into this. In the quality, we’ve done a change. We’ve seen we have a strong belief that that’s coming back into both in bright level of revenue, but also a revenue level that will drive a profitable business because it’s a low-overhead business because it’s a very standardized product that we are delivering into that. We also have a firm belief in that, and we’re seeing positive traction in building that pipeline. There is healthcare. As you alluded to, we have a business that is driving higher margins. It’s also, as you can understand, requiring a lot of investments, not only in product, but also building the capabilities of the organization.

With that, we need to build additional business development opportunities to drive that. Those additional business development opportunities, as well as outside with, for example, defense, are some of the elements that can drive, that can move the double-digit from 10% to higher than that, right? It is about, for me, also aligning the expectations. I think there is a strong growth case in RTX. I think we are in a position where we have even better, more focus, and better capabilities to actually execute on it. That is what has been so important for us to do. I think that, yeah. Should I also read that you also believe that you have to put more cost and/or do more operational investments to grab those opportunities? I think us being a technology company, we should always invest in building new technology.

Otherwise, we will become irrelevant, not tomorrow or the day after that, but over time, we will become irrelevant. I will still be insisting on we need to invest into building our technology to be relevant over time. Maybe compared to the strategy plan that was two years ago that you had to deliver on, it seems that you should have more cost to get there. If the old plan had an ambition of 18%-20% margin or more than 16%, and now you say more than 15%, it can also be because you’re more cautious being the first year or first strategy plan, but it implies that at least you see that there would be more cost to get to the higher revenue.

I think it’s also a reflection that this transition to go from where we go from basically consultancies, NRE type of revenue into product-based, that transition or transitioning the old products onto new platforms where we get the benefits of reuse that over time will allow us to do more with the same CapEx or the same level of CapEx, which in time will raise the EBITDA. It takes time. Our products are in the market for 7 to 10 years. That transition to drive that, that takes very strong execution, both commercially, but it also takes time. It’s also a question of having a fair evaluation on how these benefits kick in.

I think that being said, maybe higher numbers have been said earlier, but I think actually from an OEM type of business, having this kind of this level of earnings is also ambitions, also seeing of where we are today. You said that you are investing in a new next-gen platform for the enterprise business. Can you put a little more color on what that should end up in? Yes. Which is different from today. One thing is making sure having a regular and clear view that this market is going to be there for decades. It is something we need to keep at 75% of our revenue today. Of course, we need to invest both in growth opportunities, but we also need to invest in our core to make sure that it is there because it is driving both revenue and profit for us.

On that note, this is also one of the major investments where we actually put our platform, the modular thinking, the modular investments so we can reuse our R&D investments in multiple markets with multiple customers, which over time will bring more operational efficiency, both in R&D, but potentially also in operations and shorten time to market because we can easily onboard new customers on this platform. It also entails a lot of differentiators in terms specifically for our Chinese competitors on security and cyber resilience and compliance to both eco standards and cyber security standards. That is really an uplift. This is also where we are putting our latest innovations in and making sure we have differentiators in the market. The plan for that is we want to onboard customers in early 2027 and start the transition from there. Early 2027.

Financial year 2027. 2026, 2027. Okay. In the past, there was an ambition to have a split of 60, 20, 20 between the three segments. I guess it’s not valid anymore when you move from products to modules and pro audio. How would you look at the business in five years if you end up delivering on the plans? Of course, many things can change in the meantime. Yeah. Change in the meantime, but. No, but. What structure would you like? Yeah. Definitely enterprise is still going to be our core, half of our business, maybe even more, but still a core foundation under our business. Definitely. Healthcare should be a significant part of our revenue, 20-30% in that order of magnitude. Also, quality when we succeed with that is also going to be around the 20s or something like that.

Driving also, and I think pro audio for us is also, it has to be profitable. We have a strong plan for that and strong belief it’s going to be. It is actually also a way for us to do innovation with customers because in pro audio, we are exposed to many different markets. One we’re exposed to right now is defense, and that gives us deeper insight. Pro audio actually also holds that benefit to our business, even though it might be 20% or in that order of magnitude of our business. If you look at pro audio today, is the transition to modules more or less completed by now? Yes. It is somewhat your business now. Yeah. We have, I think, one, maybe even two customers that still have products, but it’s something we’re definitely balancing.

All our future pipeline is on modules, and it’s actually progressing quite as we hoped on that. Milly, you commented on your inventories, which is now down at DKK 36 million. Is that a sustainable level, or is that an extraordinarily low level? Yeah. I think that’s a sustainable level. I think I’ve said before that we should be down to around DKK 40 million, and I think that the right level is between DKK 30 million-DKK 50 million. Generally, we want our partners to do the component purchase. There can be incidents where, in order to ensure production with short-term orders or where we’ve got strong relations with the chip providers, we will purchase. Also, with the geopolitical situation where sometimes we’re actually not able to purchase from the current supplier due to political things. We will sustain a level.

I would assume that it will be around this level going forward. Okay. Miguel, you have a question? Yes. I was just looking at the notes, seeing that the full-time employees is up 10% during the past year. Could you give some color on where these new hires has been and how should we look at it a year from now? Is that 10% on top of this, or what is your expectation there? Thanks. Yes. The addition of employees during the year is basically an insourcing of external consultancies. We have created a company in Romania where we’ve got mainly testers, but also software developers sitting. It is basically nearly the same people as we had from our outsourcing partner. The increase in headcount is, I can say, it’s not a real increase. It’s insourced. I hope that answers your first question.

The reason we have done that is because testing resources are an important part of our software development. We would like to have it insourced and be in control of these resources. Of course, we also see Romania as a location where there are strong software competencies and it can be a supplement to our current locations in Denmark and in Hong Kong. That is the reason that we have insourced that. Going forward, I expect that we will see a small increase in headcount on the things that Henrik mentioned before that we are investing in, but we are trying to balance investment in additional resources with the need and then also focusing some of the resources that we have today on, for example, pro audio, that we are focusing them on the growth market.

Trying to keep the CapEx increase or the capacity cost increase at a lower level than the revenue increase. Thanks for clearing that up. Okay. I have a question. We have a third participant here, the Chairman, Henrik Schimmel. If I look at the balance sheet, you have DKK 150 million on the balance sheet now, no debt apart from leasing. You reiterate the capital structure policy and a report of a cash position of DKK 80-100 million. The cash flow was DKK 50 million last year if I adjust for the improvement in taxes. Underlying strong cash flow and you guide increasing margins. My question is, why should I not see a DKK 50 million or something additional share buyback here or dividend? That’s a good point. Something we’re discussing. We are above our limits for the capital policy as such, you’re right.

As you know, we do have a share buyback program going on right now, DKK 20 million. We expect that program to be completed probably around May of 2026. It is time for us to then consider what’s next. What would be a next round of, let’s say, share buyback as an example? We definitely consider that so we get back to a level which is closer to or within our range. As a year goes by, we will also look at what does it take to run the business as we expected and see if there are other needs.

Rather than committing to a size or complete program right now, we’ll say, "Let’s revisit that once we have completed the first and where we stand roughly mid next year." Where is both the management team and the board on starting off an M&A track now that you have the resources? Could we see that the money is being sent in that direction instead? You could imagine that there could be investments. We want to be very cautious in talking about that before we have something real on the table. We do not have anything to discuss where you want this. It is definitely something we are considering. I think you saw also in the ambition that was laid out and clearly aligned with the board that the business development portion plays a key role.

That could be within sort of how can we sharpen the knife on the businesses we are in and what other opportunities might exist. Definitely something that is being considered. Okay. That was actually my questions. Are there anyone out there who has a final question? Otherwise, we will round up here. Yeah. Thank you, everybody, for participating and have a good day. Yeah. Thanks for listening. Thank you all. Great day.