Rtx A/S

F:RTE

Yes. So thank you very much, and welcome to all of the attendees. Yes, let me first give you a short introduction to RTX. Some of you might know RTX, yes. And and some of you might not. So who's RTX? Well, basically, we've been working with developing wireless communication solutions and products for a critical environment for more than 30 years. And our main specialty are three segments where we -- sorry, where we deploy our technology. So one is Enterprise where we deliver Headsets and Handsets to different environments such as warehouses and office buildings. Places where you might find our products is if you go to the local grocery store, you'll find these push-to-talk headsets that really enable good customer service and safety for office staff. So that's where you'll find our products.

We also have a segment into Healthcare, where we develop wireless infrastructure for monitoring of critical heart patients. So really allowing heart patients to freely move around because they are connected to surveillance equipment wirelessly. It also allows the clinical staff to have a more optimized day-to-day work because you can do centralized patient monitoring. And then finally, we actually also deploy our technology as a chip where we enable our customers to building wireless solutions with yes, secure and wireless technology, and that can be deployed in anything from defense, first responders, but also into professional audio.

And we do all of this in an OEM model. So you won't find the RTX brand in the store, but you'll find our partners' brands in the store, partners that we've been working with for a decade, the likes of HP, Cisco, Philips, Alcatel, that brings our product to market. So that was the very quick flyover from RTX.

And then I'll hand over to Mille, who will lead us through the Q3 results.

Yes. Just in a few minutes, I'll take you through the main results for RTX. The first 9 months revenue went up by 8%, corrected for constant currency. Gross margin increased to 54.8%, up 4.1 percentage points compared to last year, and EBITDA rose by 35% compared to last year. I'll dig a little bit deeper into those numbers just in a second. The last thing that happened in Q3 is that we extended the current share buyback program we had, last year, we approved a current share buyback program of DKK 20 million, and we extended that with another DKK 20 million in the quarter. So if we take the highlights, the next slide, yes.

We see a revenue of DKK 150 million for the first -- for this quarter and DKK 416 million for the full 9 months. You see in the graph on the right there, you can see the distribution between quarters and a relatively even distribution compared to last year, but an increased profitability. That leads me to the next slide, which is the gross margin, where we see an increase both when we compare to the third quarter last year and when we compare to the first 9 months of last year and when we compare it to the full year. And the reason for this is the split between the segments.

First, I'll just take you through the development of the EBITDA because with the business that we have, the impact of gross margin very much goes to EBITDA because our capacity cost do not scale at the same rate as our revenue or EBITDA. But to understand a little bit better why this increased profitability is shown in this first 9 months to the extent that it is, I will just take you through the three segments, the development in the three segments.

So we have, as Henrik mentioned, Enterprise, ProAudio and Healthcare and ProAudio and Healthcare are the two segments with the highest margin. Enterprise is our biggest segment, where we have the largest share of revenue, where we've got solid long-term partnerships, but it's also a segment where the growth in the market is lower than the two others. Therefore, when we see a different distribution as we had in the first 9 months compared to last year, where ProAudio and Healthcare takes up a much bigger share. We see that reflected in the gross margin for the whole company.

ProAudio, we -- a year ago this a couple of years ago, decided that we wanted to focus on module business, standardized products, economy of scale, and that seems to pay out as we see here in the growth and Healthcare growth is one of our strategic investment areas where we have also seen a significant growth in the revenue. If we -- this leads us then to the outlook where we, this morning, increased our outlook for the year. And we increased mainly on the profitability markers EBITDA and EBIT, but also a little on revenue.

The reason for this is that we have -- basically now, we have a solid 10.5 months, 1.5 months to go in the quarter, and we feel that we are relatively sure that profitability that we can predict is there. The reason that the -- you can say the interval is still relatively large is the component situation where delivery lead times of components is a big challenge that we are facing. But increase of profitability from -- on EBITDA from DKK 35 million to DKK 65 million, up to DKK 50 million to DKK 75 million on EBIT from DKK 0 to DKK 30 million, up to DKK 20 million to DKK 45 million. And with that, that kind of supports our long-term ambition. So will you say a few words about that?

Yes, of course. Thank you, Mille. So all in all, I think the first 9 months is definitely pointing in the right direction, even though Q3 have been impacted by limitations in component supplies. We are seeing a strong market trends in the segments that we also pointed out in our growth ambition that really should drive our future growth, so both the Healthcare but also the turnaround on the ProAudio business. And also as part of the enterprise business, our retail, these push-to-talk headsets are really showing a positive driver. And we see a positive market pull of these.

And of course, happy to see also that we're able to turn this into both growth on top line, but very much seen from the first 9 months on the EBITDA and EBIT which I think is so important because that allows us to reinvest into the business, how we see more of the future growth opportunities. So yes.

Well, I think, of course, the underlying market pull, I think, is the most really affirmative trends that we're seeing beneath our strategy and our growth ambitions. Of course, we are challenged by the component situation, the limitation of component, but I think that also shows some of our strength that we are able to, even in difficult circumstances, both to increase our earnings because it's not only on delivery capabilities also pushing pricing on components, and that our team that are really working extremely hard in managing this, both with our customers, but also with our suppliers in managing this different situation and still show a 9-month growth trajectory.

I think that I think is what I'm most pleased with.

Yes. Yes. If we had unlimited capacity and unlimited component supply, yes, we could have sold more. We are managing that and trying to manage that also going forward in dialogue -- closed dialogue with our customers. So we can align deliveries to customers over time.

Well, I cannot give you detailed numbers, but it is -- it would have, of course, delivered a better result than we are seeing on top line, but we are working diligently to be able to deliver that over the next quarters.

Yes. I think that is a reality. So the root cause behind all of this, there are more, but the main cause is really the push for data centers, which is driven by the AI pull, and that really pushes the electronic supply chain to its utmost. So it pushes the ICs, the memory and now even the PCB, so that's the printed circuit boards and building data centers, they pay a huge amount of money. So the margins on that is higher, and that is challenging us. And we are foreseeing that going into '27 as well.

So I think it's a -- there are three main elements that we're working. One is, of course, staying very close to our customers because our customers, they are also major electronic suppliers and even producers. So being in closed dialogue with them and also to manage the supply and making sure that we can still support that business is extremely important. Having longer forecast because longer forecast visibility makes our supply chain able to manage the situation much better.

And that's the second part is really the close collaboration with our suppliers, the electronic manufacturers and the sourcing being very -- yes, very good.

Yes. Yes, exactly. Of course, it is.

Yes. Well, the price is actually a challenge because when we are in this situation, you get into something called allocation, right? So you put an order in, and that puts us in a position to most likely will get it, but there are uncertainties because the situation changed basically on a day-to-day basis. But I think that is also actually pointing to the strength of RTX because we are working with some of the major manufacturers of the world and our customers are some of the biggest companies in the world.

And they kind of loan us their leverage so we can navigate in this and also the flexibility in our asset-light setup is I think even though it is a challenge, it is proving a strong part for RTX.

With Q4, we need a revenue of DKK 170 million to DKK 200 million. That is something that we've done before. As Henrik mentioned, we've got spillover or postponed orders from Q3 -- so on top line, we actually feel even though the uncertainty is really high, we feel this is a confident -- we're confident about the top level. Then we have a structural issue that on the last quarter, summer holiday means that the capacity cost for staff is lower than the rest of the year. So we also feel quite confident on our capacity costs.

And as mentioned before, the split between the three segments also supports the gross margin, even though the share of Enterprise is expected to be significantly higher here than the last quarter.

Yes. And then I think it's actually also -- I think what we are looking at is seeing the effect of our business model in itself because with the asset light setup we have, we can scale the revenue without scaling the capacity costs. So compared to last year, where I think we did 141 million, we're looking into a significant improvement in that. That's what we are guiding. So delivering that will actually also the last -- the top-up revenue compared to last year. A large portion of that will actually trickle down to the bottom line. That's also why we see and clearly expect a good impact of the additional revenue in Q4.

Of course, you can say that. But of course, we're also investing into the business. And you can also look at the numbers that we are significantly investing in the business because its growth doesn't come for free. So we have to invest in building our customers, building our markets, building up capacity and capabilities as, for example, we've done over the last year in Healthcare. And we are seeing that kicking in. And of course, we also have expectation for that to continue.

We are investing in Healthcare. As a couple of years ago, we made a contract with one of our key customers in Healthcare, taking over the responsibility, the full responsibility for the products. And that came with also taking over the development of the product so that we have the full ownership. And that is mainly -- that's the biggest part of the change -- the other is that we are investing in a next-generation platform for enterprise which enables us to both have a more secure, more future-proofed and more efficient platforms.

Well, I'm a finance person, so I'll try to from my point of view.

Basically, what I understand is that if you develop software individually and hardware for each individual customer and don't reuse anything, you spend a lot of time and money. If you create one platform and small add-ons or small apps like we know, then you can still have a customized product but not at the same cost and at a higher security. So it's easier to maintain.

Well, we can actually support more customers on the same platform. And then, of course, I think as many of the attendees also now, the requirement for cybersecurity requirements to keep up make sure that we still keep our technology edge in an enterprise business that we've been into for more than 2 decades. So of course, we need to make sure that we still support and secure that business, so we're able to grow with existing customers and also bringing on new customers while being prepared for the context that we live in where cybersecurity is a part of the daily life frame.

What I think we are seeing aspects of it, you see the growth rates of 50% year-over-year from Healthcare. That is definitely one of the areas where we expect over the next 2, 3 years to really to see that payback we see the platform approach that we introduced in ProAudio where we really have a scalable business, and we see that trajectory going off. And then we're also seeing in the retail segment where we also, with one of our major customers have really done a close development partnership and bringing that to market is really driving growth. So I think we'll see some of the investments are longer term. I think most investments will see kicking in over the next 2 to 3 years.

I think that what I can say is that what we expect in the coming years is that the share of enterprise of the total revenue is going to decrease because both ProAudio and Healthcare is going to grow more than Enterprise. And since they are the two segments with the higher margin, that is -- we're expecting that to drive also growth in gross margin to a certain limit, of course.

But I think, yes, even though at -- in the first -- the Q3 and where Enterprise is today yes, it's -- we colored it yellow, but we still see a strong green future coming back even in Q4. And we see -- I think as Mille also said, we have a strong belief that Enterprise is a growth market, maybe not double digit, but single-digit growth. And because we have the position that we have where we clearly are the technology leader also had the opportunity to find those growth segments or niches as we've done in retail.

So we do believe that we're able to also grow and also profitably the Enterprise business.

But yes, clearly. So Enterprise as a whole, I think it is going to be a growing business. The core will be steadily growing., but seeing that we are exposed in with these customers like HP, Cisco, that are globally that has a broad solution portfolio, we are -- we have the ability to seek those growth sub verticals. And I think the best example of that is actually the retail headset which is part of Enterprise. It's based on the Enterprise platform that we're using. We just made it dedicated for the specific use in retail stores and we'll see more of those. So I do believe combined. So there will be subsegments that might go a bit down, but we'll see -- we will have an opportunity grow other subsegments as we've done historically.

For sure. Yes. But I think we have the right technology. And if you look into that market, there really is a technology trend. So in many countries across U.S., if you go in, they have like walkie-talkie or call buttons in there. And that really is not fit for the future retail store, which is much more an omni-channel so where you actually both have the online warehouse but also the physical store where you can go in and get good customer service. And that actually requires a different type of teamwork between the employees in stores and they need to have their hand-free being able to move around, having crystal clear voice being able to integrate the voice into their back-end systems. So there's a technology transformation going on in that.

And that's what our technology is actually leading. So yes, so clearly, and I think with our key partners, we are in the right position really to grab that position as the leading provider there.

Yes, yes, I think so. And that's also -- if you look at our annual report, that's actually our strategy. It's really to secure the strong foundation base in our Enterprise business. But building a really scalable business model in ProAudio, which we -- I think we've seen the strong signs that we are delivering on that. And then Healthcare as the -- both the leading in profitability growth but also in top line growth. And I think we are seeing good signs of that, and we are delivering on that, there's a lot of stones that has to be crossed and jumped over before claiming success.

But I think we are seeing good signs on it. And I also think -- but for sure, it will also require more investment over time that we invest in the right products in the right markets.

Yes, yes. But then you shouldn't work at RTX because RTX, but really -- but RTX is really about we have strong technology. We know how to build secure, reliable wireless communications and that is needed in many segments.

So I think when you buy into RTX, you also buy into that we are very focused in a number of segments where we believe we can be the winner. And that we can -- I think we are the winner in Enterprise I'm sure we can be in Healthcare infrastructure for patient monitoring and also in ProAudio where we can focus on the critical communication part. So I think that is actually the strategy. It is that we have more than one growth bets and more than one growth verticle. I think that hopefully also provides some solidity or robustness into our growth strategy.

So I think it is -- so I would say it is becoming a big part of RTX. So we are in the U.S. So with our customers who are on the in the segment for monitoring critical cardiac patients. We have close to a 50% market share with our customers in that segment. That segment in itself is growing. And we see with our investments in we have a USB access point that we are launching next year. We are doing trials this year, is what's going to extend that and really extend that market. So I think we are present in the U.S., and we're going to grow that market. There's also a European market. So I think over time, for me, it's about building a broader portfolio, and I think we are on the way on that.

Yes, I would say actually, today, if you look at our organization, Healthcare is a big part of RTX because we've really built confidence on that. If we look at revenue, it's -- yes, It's moving close to 20% of our revenue, right? So I think it is becoming. So when -- so I think really within the next 2 to 3 years, we will see that Healthcare is. And I do actually believe it is today. A big part of RTX and who we are coming.

So I think for ProAudio it's a clear plan and that's what we Have been implementing. It is to deliver standardized chips or modules that allows -- that fits many markets. And we allow our customers to address those models, whether it's its solutions for football VAR or if it's Formula 1 pit crew communication or if it is tactical teams in deployment. So I think that is actually the strength because you're right, it is a lot of different markets.

There, I think the smart thing about our business model is that we've actually focused it on the same standardized product because that allows us really to scale it without huge investments. So that is really what we've done. And you also see, I think, the impact of that really kicking in into the ProAudio business that has a strong growth and also strong growth in the future.

Let's see. I think what we see is that Healthcare as Henrik is saying is our main growth segment -- we see vertical, sub-verticals where we see potential. And not all of them are going to spin out, but some of them are going to spin out. I think we will see highest growth in Healthcare second growth in ProAudio and then as enterprise as a pool, the lowest growth, but still growth.

As a whole? I think to actually continue to succeed on the growth in Healthcare, actually establishing ourselves in the Healthcare market together with our customers and other customers. And I think it is combined with that really driving the usability of our technology, like we have done in retail. So using our technology to make a change, translating technology, if you will, to problem solving. There, I think we've got a really huge potential.

The biggest obstacle, I think it's the market. How do we actually understand and address the market? How do we move closer to our customers, to our use cases. I think RTX has a really, really strong technology base, and we are -- we want to become even better at understanding customer needs, acting on customer needs, prioritizing based on market needs.

I don't know what can actually change that plan because I think that is actually the most important for RTX is actually to have a clear direction and to be determined in the verticals and the market and the position that we want to be in Healthcare, in Enterprise and the subsegment of retail in ProAudio with the critical communication because wireless communication can be used anywhere. And we can solve a lot of problems. So I think getting that direction and determination really to grab that to get, as Mille say, closer to our customers and really owning the solutions to specific problems and the determination that actually takes.

And it's not an easy journey, but I think very much it lies in our own hands in terms of we have a strong team, and we are building that team, but having that clear direction and the ability to execute on it. I think that is -- and then it lies on us to do so. And I think ...

Yes, I do think -- to be honest, I think it's easy to make a strategy. It's harder to make the strategy reality. -- strategy. It's a PowerPoint, right? -- market surveys and stuff like that, but getting it executed and turning it into action that you can actually see both in financial results, but also in milestones, in customer wins, getting it transformed into and getting the full organization aligned behind that. I think that is clearly the hardest part.

The growth or the actual EBITDA?

I think that the increase on 35% when we -- you can say, only have DKK 30 million of EBITDA the percentage probably doesn't say that much because 35% of DKK 30 million is not so significant. But I think what it does say is that when we reach a revenue of around 600, that's when we start really being profitable and being able to invest in our future. So -- and as we surpass that, then we have even more to invest in future growth.

Who knows maybe this year, it's within our guidance.

We believe the guidance, yes.

That's our firm belief and hope, yes.

We have a capital policy with us that we should have DKK 80 million to DKK 100 million in cash. And the reason for that is that we need both because we've got big customers. They look at our solidity and liquidity ratios, and because there are changes in the market, like the component situation where we need to be easily flexible and have capital ready.

You probably also saw that we had DKK 135 million at the end of the quarter, which is more than that. And that's basically why we are initiating or extending.

You can say this is basically a board priority to say when are we investing. But as long as we have a capital policy, and that's the idea of having a capital policy that is transparent for investors what do we do with our excess cash.

Nobody, I don't have a crystal ball, but I think the signs and trends here that we are looking for, it's going to be part of 2027 at least. So I think it is going to be part of what you can say, normal business in '27 to manage that, to manage longer lead times, both to customers and to suppliers. It is definitely something that we are of course, already have taken into the Q3 end of the year guidance, and it's also that we are looking into going forward into next year how to navigate that. And I think even though it is a challenge and we'd rather have it without, I think we are in a good position to manage it anyway.

Well, the short answer is yes, but it's, of course, something that we are in close dialogue with our customers around about because to me, that's actually what matters most, is that we're able to supply to our customers so they can service their customers and have a running business because I think that's how you drive business over time. And I think we are seeing good dialogues and good understanding of that. I think again, we are about to manage. But yes, there are orders slipping in.

Well, I think, again, that's part of the conversation that we do have with our customers. And I think you can say we've gone from a few months of delivery lead times to -- for some components to 12 months even longer. So it definitely has changed significantly. And it's not all components. It's specifically three categories I mentioned earlier that are challenging that has significantly longer lead times, and that's gone from a few months to close to a year.

Well, you should never just take one number for our growth company. You should look at the revenue and you should look at the profitability. And what we are trying to do is to increase our revenue and at the same time, increase our profitability. And that is because we want to take advantage of the knowledge that we have and the technology we have and converted into revenue and profit.

Well, I think it's very much back to the strategy execution. It's actually continuing on the momentum and the traction that we do have, getting our investments that we've been building over the last year or so, getting that to market, starting to getting customer interaction, servicing customers on that, of course, driving business on it. So it's continuing the growth trajectory in Healthcare, it's really seeing the positive trend in ProAudio continuing that with strong profitability. It's the subsegment of retail with the push-to-talk headsets, really to see that continuing to grow and again capturing that market and really seeing a solid steady growing Healthcare business coming back as controlled based on us controlling the component situation.

So I think it's about really keeping the momentum because I think what we are doing today and the signs that we are seeing in the first 9 months is really where we want to go. So keeping that trajectory, I think, is the most important.

To be honest, I won't call it, I think I wouldn't call it pressure, because of course, there's pressure, but I think the dialogue I have with investors are actually more in the terms because we have a shared target. We want to see RTX to growth, and we are profitable. Well, I'm quite sure that over time, stock prices will rise and we'll all be happy. So I think we have a joint goal. And so I think the conversation is actually more helpful in getting specific input on how to do. And then we might have a different sense of patience on when to deliver results. And it's my and Mille's business, to drive this business on -- not only on quarter-to-quarter, but on the long term because that's what we have for long-term value creation. So I think it really is a constructive dialogue that we're having with investors that has shared interest in making RTX as great as possible.

Thank you. Bye.