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Operator: Good day, and thank you for standing by. Welcome to PT Indosat TBK 9M '25 Earnings Conference Call. [Operator Instructions] Please advised that today's conference is being recorded. I would now like to hand the call over to your host today, Pak Indar Dhaliwal. Thank you. Please go ahead, Indar Dhaliwal: Good day. Thank you. Good afternoon, everyone. Thank you for joining us on the call today. With us, we have Pak Vikram Sinha, our Chief Executive Officer; Pak Nicky Lee, our Chief Financial Officer; and Pak Bilal Kazmi, our Chief Commercial Officer. I will now hand over the call to Vikram Sinha for his opening remarks. Over to you, sir. Vikram Sinha: Thanks, Indar. Good afternoon, everyone. In the first half of 2025, we laid the foundation for an improved second half which can be seen in our results this quarter. We have delivered a positive result for Q3 with all financials and operational indicators moving in the right direction. If you look at the next slide, our revenue growth grew 4% quarter-on-quarter, and this was good all-round growth with all revenue lines growing on a quarter-on-quarter basis. Cellular was a big driver of growth for us as our customer base remained healthy at 95 million. Importantly, our ARPU has increased 4% quarter-on-quarter to 40,000 IDR milestones which is a proud achievement for us at Indosat. We have continued to maintain our focus on profitability with EBITDA increasing 1% quarter-on-quarter and normalized net profit increasing 29% quarter-on-quarter. With this, we are firmly on track to deliver our promise on the improved second half performance. If you look at the next slide, we have previously talked about our aspiration of achieving 40,000 IDR ARPU. However, competition and challenging market condition has meant that we were delayed on delivering on this aspiration. I'm pleased to report that we have managed to achieve it in this quarter, and we are building on the momentum on this. 40,000 is not the end goal. It is a milestone on a journey to deliver a better ARPU and realizing Indonesia potential on the ARPU opportunity. If you go to the next slide, our AI TechCo continued to make progress, and we now have our GB200 commercially live with the current capacity fully contracted. This will start delivering from Q4 2025. We continue to work closely with our customers to deliver turnkey vertical solution on our journey to deliver a full stack on AI. There remains a lot of interest on AI in this part of the world. And we at IOH intend to play our part in developing the ecosystem and deliver driving growth in usage of AI solution. We have laid the foundation this year and setting up for scale in 2026. That ends my introduction, and I will now hand over to Nicky for more detailed financial presentation Chi Lee: Thank you, Pak Vikram and good afternoon, everyone. I'm delighted to report solid set of results for the third quarter, where we are seeing some better momentum in the market. Our third quarter revenue grew 3.8% quarter-on-quarter, primarily driven by an increase in cellular revenue as we continue executing our strategy to accelerate growth through AI and enhanced network experience. Additionally, MIDI revenue contributed to this performance underpinned by GPU business. Below the revenue line, we delivered 8.8% Q-on-Q improvement in EBITDA despite higher spending to support revenue growth which I will elaborate on in the OpEx section. Consequently, our EBITDA margin declined slightly by 1.4 percentage points to 46.2%. Normalized NPAT rose by 29.1% Q-on-Q, mainly driven by higher EBITDA and operational one-off gains below EBITDA in Q3 2025, including IDR 88 billion gain from asset disposal and IDR 223 billion fiber lease reversal post reconciliation. Our net debt-to-EBITDA ratio remained flat quarter-on-quarter at 0.49x, underscoring our commitment to strategic CapEx investment for medium to long-term growth while maintaining a healthy balance sheet. If we move on to the next slide, for the next first 9 months of 2025, reported revenue declined by 1.6% reflecting a challenging market environment. This also led to a 3.3% year-on-year reduction in EBITDA with EBITDA margin softening 0.8 percentage points to 47%. The margin impact was partially mitigated by ongoing cost leadership efforts which helped preserve profitability and top line headwinds. At the bottom line, NPAT fell 7.5% primarily due to softer earnings base and high depreciation expense during the period as we continue to invest for growth. Moving on to the next slide. In the third quarter, we saw some increased spending relative to the previous quarter. As I had guided in our previous call, due to operational one-offs related to credit notes and certain cost reversals such as incentive payments. Cost of services rose by 4% on a quarter-on-quarter basis, primarily driven by maintenance activities to enhance network performance along with installation and partnership costs supporting BDN revenue -- VAS revenue growth. On a year-to-date 9-month basis, cost of services up by 5%, similar to the quarterly trend. Personnel costs grew by 17% on a Q-o-Q basis, driven by higher variable pay in line with revenue performance. On a Y-o-Y basis, personnel costs actually declined by 21%, reflecting lower favorable pay components such as bonuses and incentives compared to the prior year. Marketing expenses increased by 6% on a quarter-on-quarter basis, largely due to increased campaign activities and several new product launches during the quarter. On a Y-o-Y basis, marketing spend declined by 17% reflecting a strategic shift towards more targeted and cost-efficient digital marketing initiatives. G&A expenses rose by 46% quarter-on-quarter mainly driven by professional fees in supporting development and growth of business. However, if you look at it on a year-on-year basis, G&A expenses actually dropped by 3%, underscoring our continuing efforts to control spending in this area. The depreciation and amortization expenses decreased by 3% Q-on-Q, largely due to the fiber lease reversal, post reconciliation. So this is an accounting adjustment put through in the quarter. On a year-on-year basis, D&A expenses up by 2%, driven mainly by the addition of it asset from network rollout to support medium- and long-term growth. In quarter 3, other operating income expense recorded a net income of IDR 78 billion compared to a net expense of IDR 3 billion in the second quarter. This variance was primarily attributable to higher operational one-off gains from disposal of dismantle assets. On a year-on-year basis, prior year tax provision reversal of IDR 121 billion in operational one-off gains contributed to an increase in other operational income from IDR 81 billion in 2024 to IDR 378 billion in 2025. On to the next slide, CapEx decreased by 33% quarter-on-quarter to IDR 3.3 trillion in Q3 as the prior quarter, included GPU CapEx spending that did not recur. However, we continue to invest in our network and increasingly in 5G space. As a result, our 9-month 2025 CapEx has already reached 82% of our full year guidance. Net debt is flat on a quarter-on-quarter and our net debt-to-EBITDA ratio remained flat at 0.49x as mentioned earlier. On a year-on-year basis, net debt went up by 31%. And primarily attributable to CapEx investments for growth, including additional GPU investment in this year. That ends the presentation for the finance section. I will now pass the time to Pak Bilal. Syed Kazmi: Thank you, Pak Nicky, and good afternoon, everyone. I think from a commercial standpoint, the headline is healthy operational trends. As was mentioned earlier, these are underpinned by solid ARPU growth over a stable base. And this ARPU growth is moving along nicely with data traffic growth. Moreover, IOH is reporting a 4.9% increase in HPP customers. Indosat is also very proud to share the launch of SATSPAM product, which literally solves the national problem of spam and scam. This problem impacts millions of customers. To solve a challenge at this scale, we have benefited from all the good work done on lifting that use of AI in our go-to-market propositions. The end result, of course, is higher customer trust and engagement. Indar Dhaliwal: Thank you. Operator, can we move to the Q&A? Operator: [Operator Instructions] The first question comes from the line of Piyush Choudhary of HSBC. Piyush Choudhary: Yes, good afternoon, and thanks for the call. If I can ask 3 questions. Firstly, congrats on achieving the milestone 40,000 ARPU, which you have talked about earlier. But can you talk about mobile ARPU outlook and what other initiatives are being taken to increase? And what needs to happen for subscriber addition to restart? Secondly, on EBITDA, you have maintained the guidance despite 9-month EBITDA being down 3% year-on-year. So any -- what are the levers which you are expecting in the fourth quarter and if you can throw light on partnership costs and installation costs, which are both up more than 20% quarter-on-quarter. And any outlook for these cost items, particularly partnership and installation? And last one on your monetization, like any update on fiber asset monetization? Vikram Sinha: Thank you, Piyush. This is Vikram. Let me start with the guidance. I think we had given the guidance of low single-digit EBITDA growth. We are optimistic that momentum, which we have seen in cellular in Q3 will continue in Q4. And we will also see additional growth coming from our AI tech co-verticals. This will drive revenue, which will be positive for EBITDA growth. And we will be stringent on our cost We feel confident and we still hold on to our guidance, Piyush. So that is the first question. Coming on to ARPU. Yes, it took us quarter more than what we had expected to get to 40,000 milestones, mainly because of 2 reasons: one, micro conditions, what we have seen in Indonesia, especially our low-value customers, lower middle class, they are optimizing. And we see things improving. Last especially 3, 4 weeks, we have been seeing a lot of activities from government side. The new finance minister has been also working to stimulate domestic consumption. So these are really good trends. We will be watchful of it. But I think the more important thing is what is in our control, our AI hyperpersonalization, the data and model is getting trained and that is really helping us to give what we call it, a very hyper-personalized experience, and that will help us continue growing our ARPU. So we stay positive that future growth will be ARPU-led and as I said, 40,000 is just a milestone. We believe that in Indonesia, we have an opportunity to get 45,000 and 50,000 over a period of time. Customers, what we are seeing with the discipline in the market of 3GB 35,000 getting implemented in a quite disciplined manner from all operators. We are seeing some SIM consolidation. So having said that, we still believe that over a period of next year, base will be progressive. But for next 3, 4, 5 months, we will see a bit of a SIM consolidation, which is good for the industry. So that is what I can tell you in terms of base. But from a 2026-point of view, we still expect a positive base growth. For the cost one, I'll hand over to Nicky to give more color on it. Chi Lee: Hi, Piyush, this is Nicky. Thank you for your question. In terms of partnership and installation costs, they are very much revenue driven as we get more activities in terms of MIDI and VAS revenue. So in terms of training you asking, we're seeing 4%, 5% kind of growth. Vikram Sinha: Yes. And Piyush, coming back to your fiber co carve-out project, we are in the advanced stage of discussion with our investor given fiber co is a very strategic for IOLs future ambition for both FTTH and AI infrastructure we are taking adequate steps to ensure that we take this right even looking at both short-term and long-term perspective. But I'm expecting that you will hear more clarity and reason in this in the next 30, 45 days. Piyush Choudhary: Got it. Just on partnership and installation, sorry, I missed which part is revenue, where we should see the commensurate revenue because is it more in your VAS revenue or it's MIDI revenue? Chi Lee: Yes, yes. You're exactly right, Piyush, is more to do with our VAS and MIDI revenue. Operator: Our next question is coming from the line of Sachin Mittal from DBS Bank. Unknown Analyst: Yes. Congrats actually on the sequential recovery in cellular revenue. That's quite heartening to see. Any color on what's taking a toll on the margin in the quarter, what are those cost items? Just any color will be good. Secondly, on the GPU as a service, are you able to disclose was is there some kind of -- is kind of forward counting of cost? Or is it how much contribution of months of revenue we had from GPU as a service? And associated question is, what we are hearing is that GPU as a service, the plain vanilla, GPU as a service used to have a 3-year breakeven, but probably the 3-year breakeven may not be possible unless there's something -- some application layer added on top of the GP as a service to make it more sophisticated, more useful for the user. So could you have any comments on this? And how to think about this GPU as a service. Vikram Sinha: Sachin, this is Vikram. Let me start with our GPU as a service and AI full stack. I think first you will see revenue growing mainly from quarter 4 because our GB 200 cluster went live in September. So from October onwards, we will see the full month impact in the quarter. We got started with L450 H-100, and I'm happy to say that we have close to 24, 25 domestic customers, especially on L450, and that is also stacking up quite well. And you will start seeing the impact of it starting quarter 4. We have seen a little bit on our MIDI revenue because when you look at our MIDI revenue, we are pivoting from lot of projects based on track to AI cloud services. So -- and the we are seeing that the domestic customers are going with healthy margin. When it comes to global customer GPU as a service, you are right, vanilla, we have to make sure that we don't only sell GPU as a service, we also work at an application level. So we're working with NVIDIA and the partner ecosystem that we have a good mix of both. And overall, we are expecting that full year next year, you will see a very positive impact of this on our P&L, not only at EBITDA level also at an EBIT level. Unknown Analyst: Okay. So basically, you're still optimistic that those 3-year breakeven numbers are still valid, but probably with the more application on top of GPU as a service? Vikram Sinha: Yes, yes, Sachin. And look, yes, I think, can you hear me? Unknown Analyst: Yes. Vikram Sinha: We are very optimistic that we are all set for scaling up next year, which will come with healthy margin at EBITDA and EBIT level, especially with our AI full stack approach. We don't want to become a dumb pipe on when it comes to GPU as a service. We want to make sure we play at a full stack level. Operator: The next question comes from Sukriti Bansal from Bank of America. Sukriti Bansal: Congratulations on the sequential growth. Just 3 quick questions. One is on your postpaid ARPU. In 2Q, did we have some one-off? It was really -- it jumped up a lot in the second quarter and is down again in the third quarter. Why is the -- it's something to do with the plants that we changed or why has it moved around so much? And on postpaid in terms of subscribers, have we seen a subscriber decline in prepaid this quarter but postpaid has grown. Is this a cleanup on the prepaid side from the same cards? And what should we expect in terms of trend going forward here? Secondly, on the GPU as a service, is it possible to give, I understand fourth quarter will be a bigger impact with any kind of guidance on how much revenue we had this quarter, what kind of revenue we could see next quarter and for the full year? Is there any change next year, what we would be expecting? And yes, lastly, I think just on the fiber asset, I mean there is a lot of supply, which is coming up in terms of fiber asset spin-off in the market. What does that do to the prospects in terms of the kind of bargaining part we have in terms of how we sell this asset? Vikram Sinha: This is Vikram. Postpaid, let me start with postpaid. Postpaid overall has been a very good turnaround story for us. We have been consistently growing on our base and especially our premiumization and IM3 platinum has been really doing well. Year-on-year, our revenue on postpaid, Nicky can correct me, is more than 20%. We have also crossed the milestone of 1 million base. So overall, postpaid has been a great story. The second point which you spoke about on prepaid, I think our base is more or less stable. There's a bit of a SIM consolidation happening because this is a very good thing of these rotational in churn with the 35,000 3GB, the industry is moving in the right direction. But overall, our prepaid base is also stable. It has not declined more or less it is flat. So that is on prepaid. GPU, let me give you 2 data points. One, we still stand with our outlook for full year, which is around close to USD 30 million to USD 35 million. What does that mean annualized for next year. It is already on the contracted customer, it will be more than 65 million to 70 million for full year next year. and things will only build from there. So that is in terms of the outlook. We don't get into more detail. You will start seeing this on the MIDI line item going forward. For fiber asset, as I said, this is in the advanced stage of discussion with our investor given the strategic nature and what we want to achieve is not only unlock value for IOH, but also, we want to see how this platform will help us grow on FTTH and AI infrastructure because we are doing a lot on our AI full stack. So I think this is a very strategic platform which is shaping up. And you'll have to wait for a little more time. I'm sure you will get more color to this. We'll be more announcement in the coming few weeks. Sukriti Bansal: On the CapEx on GPU as a service for this year, do we have a number that we can share? Vikram Sinha: Nicky said it was in our guidance. Go ahead, Nicky. Chi Lee: Yes, yes. CapEx on GPU is around IDR 100 million for this year. Operator: Our next question comes from the line of Arthur Pineda from Citi. Arthur Pineda: Thanks for the opportunity. Can you hear me? Three questions, please. Firstly, in the GPU as a Service. I recall you were guiding initiative for $35 million to $40 million in revenue bookings. Has any of this been booked into 3Q? I'm just wondering how much more do we see into the fourth quarter or the guidance has been changed with regard to the revenue booking? Second question I had is with regard to CapEx. I'm just wondering what your thoughts are on mobile network CapEx. Your competitor has been guiding quite aggressive increases in their spending around IDR 20 trillion to IDR 25 trillion for the year. Does this is concerned that IOH could find itself lagging from a network standpoint, which would then impact its market share. I'm just wondering how we should look at this going forward? And last question I had is regard to the CapEx sorry, the OpEx increase, which has resulted in slightly lower margins this period. What items are you expecting to be optimized into the fourth quarter, which would actually lead to some reductions and obtain your growth on EBITDA? Vikram Sinha: This is Vikram. On GPU, you are correct. We gave a guidance of around IDR 35 million and the significant portion of that was coming from GB 200, which got live on September. So yes, we have booked in first 9 months, but the significant portion will flow through in quarter. So we stay true to the guidance. We still feel confident that we'll be able to meet our guidance of IDR 35 million. On mobile network CapEx, I think we are in a good place in terms of our network experience. And we see that the guidance and the amount which we have been spending around IDR 11 trillion to IDR 12 trillion is a healthy pace. I can't comment on other for IDR 25 trillion. I've been in the industry for here in Indonesia. Humanly also, it is very difficult to deploy IDR 25 million in 1 year. But more important, we have a strong balance sheet, as you have seen and we are very confident that we will not compromise anything on our network investment because we will not cut corner anything which helps us on midterm, long-term growth. And the guidance, which we have been giving we feel is the right range, and that is where we need to focus more on splitting our asset and monetizing existing investments which we have done in the ground. Chi Lee: Yes. In terms of OpEx and costs, Arthur, this is Nicky, the movement is more to do with a change in revenue mix. As you understand, we have very, very high margin for cellular revenue. And as the contribution on a relative basis from this line of business dropped a bit, that will have a profound impact on the overall margin. But if you look at our cost composition is mostly due to installation cost and partnership costs. So we are getting more such services into our revenue line, which is a good thing. We actually managed to optimize a lot of our basically every single line item. So our cost base even if you -- on a 9-month basis, if you include COS is actually flat, right? So we will continue to look at every single item and look for opportunities with the advancement of technology. We have deployed AI across many facets in our organization. We have found a lot of opportunities for us to look at more efficient way of conducting business. Arthur Pineda: Maybe just to better understand it. So for you to attain your single-digit -- low single-digit growth on EBITDA you're basically needing to drive up your revenues quite dramatically because you've changed the revenue mix? Is that how I should see this into the fourth quarter? Because the target for the year is to growth, yes? Vikram Sinha: Yes, Arthur, I think you are asking -- you are absolutely right. This is Vikram, Arthur. We have to make sure that our cellular revenue, which we have seen a good momentum in quarter 3 continues on quarter 4 and additional growth coming from our AI TechCo, which is our AI cloud GPU and also security some of these things which are -- which will start flowing from quarters. So you are right, our revenue -- and also, we will continue to have cost discipline. So I know it looks challenging, but we stay confident and we want to hold on to our guidance on what we have said. Operator: Our next question comes from the line of Henry Tedja from Mandiri Sekuritas. Henry Tedja: Thank you for the call and congrats management for the 40,000 ARPU milestone here. Perhaps 3 questions from me, please. The first one regarding the early site lease termination. So just curious, is it related to the tower and fiber, which is a part of the integration process during the IOH merger? And if yes, how does the progress have you completed all of them? And then the second question, perhaps related to mobile competition. I know that Pacira early has mentioned about the purchasing power of the consumer, which has improve. Can you provide more color on this? And how do you see the competition landscape in the last 2 or 3 months? And the last question for me regarding the GPS surface. I think Pak Vikram mentioned previously that the USD 30 million, USD 35 million of revenue target for this business coming mostly from the GB 200, which commercially live in September. So I'm just curious how about the revenue contribution from the future that you installed last year? If I'm not mistaken, it's H-100, right? So how's the traction so far on this GPU and the revenue target from the purchase period here? So I think those are my questions. Vikram Sinha: Let me start with GPU. I think L450 and H-100, we are focusing more on domestic customers. while the count of customers is more than 20%, but these are small ticket and it is building up. So all in fact, H-100 is fully contracted and 50% is contracted and these are recurring long term. But the global and regional customer is on GB 200. So that is how we'll see the full year of 35 million. But the good news is that we are really getting ready for scale up. Our full AI full stack is getting ready. We are working with NVIDIA and some of the partners like Accenture and some of the other partners where we will be able to not only sell GPU as a service, we'll be able to contribute both consumers and B2B at an application level. So the mix of both put us in a good place of healthy EBITDA and EBIT margin. This is the full detail on GPU as a service. Second point on mobile competition, I think it is good to see that the market as an industry is getting discipline on specially you and through rotational customers. So it by moving towards decent drive of 35,000 in 3GB. It is all getting discipline, which is a move in the right direction. But more important, last few weeks, I would say, and these are early trends. We have seen a little bit of improvement on our domestic demand and consumption. We had seen our low-value special customer optimizing a lot a day, again, we have to stay cautious, but we have seen some improvement. So we are very confident that quarter 4, we will build on the momentum we have seen in let's wait and watch for more detail. Overall, we are expecting that next year, overall, from an industry point of view has to be much better than what we have seen this year. Chi Lee: Henry, this is Nicky. In relation to your question on early side termination, our integration process was completed 2, 3 years ago, more than 2 years ago. So -- but they were still sites that are under contract. So we managed to terminate some sites with a particular power provider that give rise to a one-off gain for us. So don't expect this to be a recurring item for us. Henry Tedja: Sorry, but Nicky, perhaps, have we completed all related to this contract termination? Or do you think we still have some more or perhaps a few regarding this one? Chi Lee: Yes, no more, no more. We have completed, the work completed a couple of years ago. Now or the contract, everything optimized already. So as I said earlier, this is kind of a one-off item, although we keep looking at different ways to get savings and other income. But this particular item, unless there are some other changes, we don't see this to be like a recurring or further other income from some of this particular change. Operator: Our next question comes from the line of John Te from UBS. John Te: I have just 2 questions. First is on trends on ARPU. Data traffic was up by 4% quarter-on-quarter, which largely tracks ARPU and which also means that data yields were rather stable despite price initiatives or pricing initiatives during the first and the second quarter. Any anecdotes you can share about when we might see data yields improving? Second and related question, were there activities in the market by yourselves or something that you've observed that points to further price rationalization and easing of competition that happened perhaps in the third quarter? Lastly, separately on the fiber sale I think you mentioned earlier also that you will take "adequate steps to balance the short-term benefits to relative to your strategic positioning", I appreciate if you could provide some details or if not, just some very broad strokes on what these steps might be. Vikram Sinha: Hi John, this is Vikram. On the fiber sale, as I said, this is a very strategic asset. And we feel we are in a good position. You will have to wait for a few more weeks for us to conclude and then disclose everything. But overall, we see that we are in a place where we see value unlock. And also we see this as a platform, which can help us grow on FTTH on AI infrastructure. So that is the balance which we were looking at. And I think we are in a good place to conclude that. But please wait for a few more weeks. Second point on activities in the market, I think we have seen especially the discipline around using through SIM. We see that's a very good move, and it is getting discipline across oven in the industry. We have seen it for ourselves, and that will lead to more sustainable growth. What we want to avoid is people coming in market to buy cheap data and they buy the SIM. That clearly doesn't go into EBITDA, and that is what you see getting corrected in the market. Last point on trends in ARPU. I think this is an ideal situation where the data traffic and ARPU growth. I remember there was a time where data traffic is growing 70% and revenue is growing 5%. That was not sustainable. So last quarter, what we have seen 4% data traffic growth, 4% ARPU growth. This is a very healthy sign. Our bigger focus is to grow ARPU in a very sustainable manner. As I have said earlier, Indonesia is under indexed, whichever way you look at it. There is a room. So we just want to make sure that also the domestic demand, the domestic consumptions, which we are seeing improving. And then we want to make share we take care of our low-value customers. But overall, we feel confident that 40,000 is just a milestone. We need to build from here. Operator: [Operator Instructions] We have follow-up questions from Piyush Choudhary of HSBC. Piyush Choudhary: Yes. Just on the GPU as a service, if you're suggesting almost $30 million to $35 million to be booked in the fourth quarter, then could you help us understand why 2026 outlook is only $65 million to $70 million and not like $120 million to $150 million? Just trying to understand how does these contracts work? And why it is bunching up in 4Q and not kind of spreading at a similar rate in 2026. Second question, Nicky, when you mentioned about the installation cost. Is there upfront cost in 3Q where actually revenue will be booked more in 4Q and that's why we are seeing kind of margin decline right now. And when you said 4% to 5% growth, is it year-on-year growth going forward in 2016? Just want to clarify these things. Vikram Sinha: Let me start with GPU as a service. I think we don't get into more detail, but what is important to know is what we are telling is all contracted and these are multiyear contracts. So what we are telling for this year and next year is minimum worth to. I'm sure we see more opportunity to scale up but we have been very cautious of not over guiding on anything, especially on this new business. Chi Lee: On the installation cost, the 4%, 5% is really driven by business. So it depends on the demand for the business from VAS and MIDI, but that is the kind of year-on-year growth we are including in our forecast. But the actual change will be determined by the demand required consumption growth for this business. Yes, on the accounting side, Piyush, you're correct, we booked the installation cost. So potentially some of the related revenue from the contracts, related contracts will come later. But there's always year-on-year period-on-period effect, which would tend to cancel out each other. So I don't feel we should take that into account in your model. Piyush Choudhary: Got it, Nicky. So I think this is more like quarterly volatility will happen in this cost item because of the revenue recognition. Chi Lee: Yes, it's more to do with the revenue mix, as I mentioned earlier, Piyush. Operator: Thank you for the questions. At this time, we appear to have no more questions from the line. Allow me to hand the call back to management for closing. Indar Dhaliwal: Okay. Thank you, everyone, that ends the call for today. As always, do get back to me if you have any further questions, otherwise take care. We'll speak to you next quarter. Thank you very much. Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect your lines.
Operator: At this time, I would like to welcome everyone to this Nordic Semiconductor Quarterly Presentation Third Quarter 2025. Today's call is being recorded. If you have any objections, please disconnect at this time. [Operator Instructions] I'd now like to introduce Head of Investor Relations, Stale. Stale, over to you. Stale Ytterdal: Thank you, Patrick, and good morning, everyone. As Patrick said, this presentation is being recorded and will be accessible on the Nordic website in the Investor Relations section. And additional, for those of you who missed the release, you can also find the earnings press release, quarterly report and presentation material on our website. With me today, we have Vegard Wollan, our CEO; and Pal Elstad, our CFO. They will share details about our recent financial performance and updates on key business developments. Following the presentation, as Patrick said, we will move on to the Q&A session. During this session, live questions can be submitted through the Q&A dial-in feature. For instruction how to dial in, please refer to the earnings call invitation available under stock exchange notice on our IR website. As a reminder, this presentation includes forward-looking statements that comes with inherent risks and uncertainties. Actual outcome may differ materially from those statements expressed or implied. We highly recommend reviewing our detailed Q3 quarterly report and the 2024 annual report for a deeper understanding of the risks and uncertainties that could impact our business operations. With that, I will now hand the microphone over to our CEO, Vegard Wollan. Vegard Wollan: Thank you, Stale. My name is Vegard Wollan, and I'm the CEO of Nordic. And with me today, as always, our CFO, Pal Elstad. Let's look at the main takeaways from the third quarter. Revenue amounted to $179 million in the third quarter. This was an increase of 13% quarter -- year-on-year and in the high-end of the guiding range we presented for the quarter. Like we said at our second quarter presentation, we have been able to maintain a strong competitive position in the market, and we have been able to enjoy the market improvement over the past year. We see growth in both short-range and long-range and among both large key customers and in the broad market. In terms of end-user markets, the year-on-year growth mainly came from the Industrial and Healthcare segments this quarter with Consumer flat year-on-year from a strong Q3 last year. Gross margin came in at 52%, supported by favorable product mix and positive contributions from the cloud service business, which we recently strengthened with the acquisition of Memfault, as well as the broad market business continuing to be improving. EBITDA came in at $18 million adjusted for some noncash costs related to the Memfault acquisition, and Pal will give you the details of that and other costs a bit later. Q3 typically is the strongest quarter of the year, and we are guiding between $155 million and $175 million in revenue in the fourth quarter, which compares to $150 million in revenue in the fourth quarter last year. And we expect the gross margin to remain above the 50% level also in the fourth quarter. The top 10 customer share of revenue has stabilized at 57%, meaning that revenue has grown equally strong among our key customers and in the broad markets over the past year. Measured over the last 12 months, revenue from the top 10 customers now exceed the 2022 peak level. Revenue to other customers are still some 35% below peak levels, although we have seen a gradual improvement also in the broad market. And as we have said, it remains a clear priority to continue to build momentum and accelerate growth among our broad market customers, and we believe the nRF54 series and the range of new products we are releasing and bringing to the market now will be an invaluable tool for us to drive this going forward. We remain the clear design win leader when we look at the Bluetooth Low Energy end product certifications, with 31% of the designs certifying in Q3 and 30% over the past 12 months. This is 3, 4x -- 3 to 4x as many designs as our closest of our competitors. And note, as always, that this is counting a number of certifications, and this doesn't differ between high and lower volume products. And hence, you cannot translate this directly to revenue. And as we have said before, the transitioning between nRF52 and nRF53 Series products to the new nRF54 Series is creating a bit of a timing gap for us. And in Q3, less than 10% of the certifications for Nordic are with the new nRF54 products. This is obviously expected to increase now going forward. We continue to see great customer traction with the nRF54 Series. And as I will get back to in a minute, we are continuing to broaden the 54 Series product family with new versions to make sure that we reach a large part of the short-range market with our leading technology and products for most applications. Some of the most exciting road maps and most innovative products are being developed together with our large key customers. And with our business model, these innovations are being integrated on our standard chips and SoCs and software stacks, and made available to our customers in the broad market. However, product development takes time, and we need to allow for our customers to complete their designs and development processes, launch their products and ramp up production before we see significant revenue. And as we have said repeatedly, we will only see limited revenue effect of the nRF54 Series this year and expect to see accelerating revenue growth for the 54 Series from next year onwards. The most recent addition to the nRF54 Series is the versatile high-performance 54LM20A, which was launched in September. We do already have many customers designing and developing with this new SoC, and volume production is planned to start in Q1 next year. The 54LM20A is designed for more advanced wireless products across multiple markets, including consumer, smart home and industrial. It is particularly well suited for human interface devices, including gaming peripherals that require low latency wireless connectivity and high-speed USB. With 2 megabytes of nonvolatile memory and 512 kilobytes of on-chip RAM, it's also ideal for smart home devices such as Matter implementations, offering ample overhead for the application software without requiring external memory. This is the fourth variant in the nRF54L series. We started out with the baseline 54L15 and followed up with the 54L10 and the 54L05 for more cost-constrained applications, before we are now introducing the 54LM20A for more advanced and feature-rich applications. The 54LM20A launch signifies the step in delivering a comprehensive 54 Series portfolio to cover a broad range of applications, marking the 54 Series as the front-runner product family in the industry. Like the other wireless SoCs in the nRF54L Series, the 54LM20A delivers twice the processing power and 3x the power consumption efficiency compared to the industry reference, the nRF52 Series. We will continue to launch new and innovative SoCs and new software solutions for the nRF54 Series to ensure that we reach the entire addressable market with a relevant and best-in-class product offering. Nordic has achieved tremendous success with the nRF52 Series, which is also predominantly constituting most of our current revenue. And that family is the undisputed industry standard for Bluetooth Low Energy connectivity. This success is closely tied to the SoftDevice Bluetooth software stack and its support for the nRF52 Series. Now we are introducing the equivalent for the nRF54L Series, the nRF Connect SDK Bare Metal. The NCS Bare Metal is an easy-to-use software solution for developers developing simpler Bluetooth applications where they don't need a real-time operating system. Developers using the Bare Metal option retain the possibility to upgrade to Zephyr-based NCS with full-featured capabilities if needed. Summing up, we are making it easy for customers and especially our broad market customers to migrate their existing software code base from nRF52 to a familiar programming environment on the nRF54L series. Before Pal will take you through the financials, I would like to spend a minute on our acquisition of Memfault and the speed of integration into our service offering. Already 3 months after onboarding Memfault, we launched a new chip-to-cloud life cycle management solution that enables our customers to locate, monitor, manage and securely update devices over the air in the field with the new nRF Cloud powered by Memfault. The combination of Memfault's device observability and nRF Cloud device management enables development teams to monitor real-world behavior, speed up debugging and create fixes based on real data and reliably and securely deploy firmer updates over the air. The ease of use this service offers represents a major step in terms of efficiency, and we have already seen several customers committing and other evaluating the new service offering, many others evaluating it. The new nRF Cloud services platform is now applicable to all Nordic connectivity technologies, short-range, long-range and Wi-Fi. A few days ago, the nRF Cloud powered by Memfault services platform was awarded the Cloud Computing Innovation of the Year in the 2025 Mobile Breakthrough Awards. This shows that nRF Cloud is being recognized for its contribution to cloud life cycle solutions within the global wireless technology industry. We communicated our strategy to transition to a complete solutions provider with leading technology across the three strategic pillars. These are hardware, software and services. And it's great to see us starting to deliver on that. And here are some exciting news from the world of next-generation mobility. Also, the innovative e-bike brand incubated by the electric vehicle company, Rivian in the U.S. made a big splash last week in San Francisco with the launch of their stunning new e-bike, a fusion of design, performance and connected intelligence. Nordic Semiconductor is extremely proud to be at the heart of this breakthrough, powering the bike's smart connectivity experience with three of our advanced wireless chips. The new short-range SoC, the 54H20, the nRF9151 from long range, which we launched in Q3 last year, and the nRF7001 Wi-Fi connectivity chip. On top of that, the e-bike's diagnostic, cloud connectivity and life management are enabled by our newly released nRF Cloud services, seamlessly integrated with Memfault's powerful device observability platform. This collaboration showcases Nordic's technology ecosystem and that we are accelerating the future of connected e-mobility from robust wireless performance, application processing to cloud intelligence that keep riders safer and smarter on every journey. Thank you. And with that, I'll leave the floor to Pal. Pål Elstad: Thank you, Vegard. Very good that you brought up the new products we're delivering, exciting news and showing how Nordic now is delivering all the way from chips to cloud, all with our new products. So very exciting news. So I'll now go through the financials for Q3. So as Vegard mentioned, revenue amounted to $179 million in the third quarter, which was an increase of 13% from $159 million in Q3 2024. Compared to last quarter, the growth was 9%. We have a strong year-over-year if you look at the first 9 months. So first 9 months increased by 38% to close to $500 million, up from $361 million in the same period last year. Nordic maintains a strong competitive position, enabling it to benefit from a continuing gradual market recovery, both among our large customer and in the broad market. The short-range business remains the revenue driver in absolute terms, growing by 7.4% to $167 million or 93% of our total revenue. Long-range revenue amounted to USD 9.8 million in Q3 '25, representing almost a fourfold increase in revenue compared to the same quarter last year and up 30% compared to the previous quarter. This reflects sales to an increasing number of both industrial and also consumer applications. In addition, long-range now see increasing contribution from nRF Cloud services after the acquisition of Memfault. It's worth mentioning that the cloud services are applicable throughout the technology offering, not just in the long-range business. Long-range in total is 5% of our revenue. The other category includes the early-stage businesses in PMIC and Wi-Fi, ASICs and development tool sales. While the technology development in Wi-Fi and PMIC is progressing as planned, these business units are still in an early commercial phase and therefore, included in other. And I want to turn to end user markets or the verticals we sell into. We see that Industrial and Healthcare is driving growth in the quarter. Industrial and Healthcare is now 35% of the total and increased 40% compared to the same period last year and 5% compared to last quarter. Part of this is because of the strong growth we see in long-range, including services, which for the most part goes to the industrial customers. However, we have previously said that revenue in Industrial and Healthcare still is dependent on a relatively small number of customers, and revenue reflects high sales to individual customers also in this quarter. Consumer revenue was flat year-over-year with tough comparable from Q3 last year when we saw especially strong performance in PC accessories and gaming and VR. Gross margin ended at close to 52%, which is a strong improvement from the last past quarters and in line with our long-term target to be above 50%. The increase versus last quarter is mainly driven by changes in consumer and product mix and the improvements in the broad market we see. In addition, it's also important to mention that from Q3, we also have a positive contribution from the recently acquired services business. The nRF Cloud business has gross margins more in line with comparable software companies and will have a positive effect on group gross margins. To sum up, we maintain our long-term ambition to keep gross margins above 50%. Now turning to operating model performance for Q3. As communicated, our operating model is set up with an ambition to move towards EBITDA margins of around 25% over the next 5 years. This quarter, we delivered a 13% revenue growth with a strong 2.4 percentage point gross margin improvement. So we have the foundation for improvements in our operating margin. However, OpEx spending will vary from quarter-to-quarter. And in this quarter, as I will turn to in the following slides, spending is higher. Despite higher revenue, we are still spending more than 27% of revenue on R&D compared with the target model of 15% to 20%. This is a small increase from 26% last year. This is partly explained by increased spending due to acquired businesses as well as higher variable pay as a result of higher performance. We saw an uptick in SG&A due to high M&A activity in the quarter, FX developments and high activity related to new product releases. Summing up, we maintain a double-digit adjusted EBITDA margins with an adjusted EBITDA of $18 million, slight improvement from the same period last year. I have to mention what's included in the adjusted EBITDA. In the adjusted EBITDA, we have adjusted for share-based components of the payment to the founders for the Memfault acquisition. Under IFRS, this is treated as compensation and amortized over the vesting period and not included in the purchase price allocation. This added approximately $2.6 million in cost in the quarter, which have been excluded in calculation of adjusted EBITDA. Now I'll turn to cash cost development. Total cash operating expenses were $75 million in Q3 compared to $63 million in Q3 last year. USD 12 million, this increase reflects acquisition and the organic cost increase was 11% year-over-year. Number of employees increased to 1,410 at the end of Q3, including 59 new employees from the Neuton acquisition and the Memfault acquisition. This corresponds to an organic decrease of 1% and a total increase of 2% compared to last year. The year-on-year cost increase mainly reflects cash payroll also when adjusting for acquisitions, which reflects both higher salaries and bonus accruals as a result of improved performance. There are some moving parts here, but overall, we expect a similar cash cost level in Q4. Next page. I think it's important to give some more highlights or basis for the cost increase. So I'll go into detail of the main bridge items. So approximately $4 million of the quarter-on-quarter increase is salary increases. Every July, August, there is the annual salary increase to all employees, and that amounts to approximately $2 million comparing Q3 -- sorry, Q2 to Q3. As I also mentioned, we have added $4 million in payroll to employees in acquired businesses, as communicated at the Q2 presentation. Furthermore, we have made additional accruals for variable pay of $4 million in Q3 compared to the amount in Q2. This reflects stronger-than-expected performance through 2025, which we haven't fully accounted for in the first half P&L. We have also approximately $1 million in additional social security tax paid on RSUs and FX changes adds up an additional $1 million. Now turning to CapEx. CapEx this quarter was $6.6 million, up from $3.1 million last year, but down from $9 million last quarter. CapEx on this slide is purchase of equipment and software, and it does not include capitalized R&D or acquisitions that you will see in the quarterly report. CapEx investments are irregular, and this quarter should be viewed in the context of the broader trend of the recent quarters. CapEx intensity last 12 months at 3.7% of revenue. Current CapEx is mainly in supply chain, buying testers, et cetera, and also IT equipment and smaller R&D investments. Finally, to cash flow. Q3 was a very active quarter with both acquisitions and refinancing. So there's quite a few items here. So first of all, you can see that we had a total outflow of $26.6 million during the quarter, partly because parts of the acquisition was financed through cash on the balance sheet. This cash flow was mainly achieved by a solid cash flow from operations adjusted for capitalization of $18.4 million, driven by operating profits and timing effects of payroll, slightly offset by higher working capital. The main increase in net working capital this quarter comes from higher receivables, offset partly by lower inventories and higher accounts payable. Inventories continues to be low and decreased $2 million in the quarter to $133 million. We commented earlier that we expect a decline in inventories during the year. However, we expect inventory levels to increase slightly in the near term. Net working capital over revenue was at 21% and is such below our target of 25%. Then to the acquisitions. Cash flow -- cash outflow in connection with the acquisition of Memfault was $107 million after deducting the cash acquired and held back shares to founders. Finally, we did a capital raise of net $102.9 million to refinance the bridge loan that was taken in connection with the Memfault acquisition. In addition, the company has unused RCF of $200 million. So together with the cash on hand, we have more than $500 million in available cash. With that, I'll turn the mic back to Vegard for closing remarks. Vegard Wollan: Thank you, Pal. Let me round off with a few concluding remarks summing up our performance so far this year before leaving you with our guidance for the fourth quarter. We have seen a solid revenue recovery over the past year. Revenue for the first 9 months was close to $0.5 billion at $498 million, an increase of 38% compared to the first 9 months last year. And if we look at revenue for the last 12 months, like the graph on the right on this slide, we are at $648 million, also up 38% from the same time last year. Of course, we know that these growth figures include more than doubling of revenues in the first quarter this year as our revenue back in Q1 2024 were heavily impacted by inventory adjustments. But even taking that into account, I would still say we have seen stronger revenue growth in 2025 than we expected if we go back 1 year. The main reason is that we have managed to maintain a strong competitive position in short-range and continued to see very resilient demand for our nRF52 product portfolio. The nRF52 has been a strong workhorse for many, many years now, and we expect this product family to perform well also going forward. However, nRF54 is here now, and we are obviously expecting to see increasing contribution from our new product series from 2026 onwards. We also see higher revenue contribution from long-range, where we have been an innovator in cellular IoT and are expanding that now into a position into a leading IoT offering for nonterrestrial networks or satellite-based communication as an additional option to cellular networks. We are looking forward to launching our new nRF92 on the 22-nanometer platform next year, further improving performance and power consumption further reducing, and making us even more cost competitive, as we obviously expect to see continued growth for our nRF Cloud services, building on the successful Memfault acquisition. We continue to build momentum with new product launches in power management and are looking forward to gain more traction in Wi-Fi with the launch of the new nRF71 on 22-nanometer next year. Overall, I think we are delivering well this year. Looking back 1 year, we said we are aiming for more than 20% average annual growth throughout this decade and gradually to be moving towards our profitability target of 25% EBITDA margin. So far, I believe we are on track. Turning to our near-term outlook. We are looking for revenue between $155 million and $175 million in the fourth quarter. The third quarter is typically the strongest of the year. And while this will be a decline from the previous quarter, we still expect growth from the fourth quarter last year. We reported a gross margin of 51.9% in Q3 and expect gross margin to remain above 50% also in the fourth quarter, which will be an improvement over the fourth quarter last year. So with that, I think it's time to open for questions, and over to you, Stale. Stale Ytterdal: Thank you, Vegard. We will now open the line for questions using the Q&A dial-in feature. Again for instruction on how to join the Q&A, please refer to the earnings call invitation posted on our IR website under the Stock Exchange notice section. To ensure as many participants as possible have a chance to ask questions, we kindly ask that you limit yourself to one question. After your initial response, you will be given the opportunity for one follow-up. With that, I will now hand it over to our operator to begin the Q&A session. Operator: [Operator Instructions] Our first question comes from the line of Christoffer Bjørnsen from DNB Carnegie. Christoffer Bjørnsen: I was just wondering, there's always been this government shutdown now in the U.S. for a couple of weeks, and we've seen how some essential entities like the SEC has shut down authorization of new electronics, I guess, across any product that has a radio in it. So just wondering, without quantifying it or talking about specific customers, have you seen any like launch schedules of new products from customers that you were expecting during the next weeks and months being pushed out in any way? Any changes in customer behavior there? That would be helpful. That's my first question. Vegard Wollan: Yes. Thanks, Christoffer. No, I think it's fair to say we haven't seen any major changes related to that. We haven't actually seen and been in any discussions and dialogue with our customers related to it on a problematic way either. Having said that, it's relatively recent, of course. And this may change some release plans for some customers. Let's hope and assume it doesn't last too long, but we shall see. Christoffer Bjørnsen: All right. That's helpful. And then a follow-up on the strong gross margin. Can you just help us unpack a bit like how much of that strength in the gross margin sequentially is due to the entry of the more software high gross margin business from Memfault? And how we should think about the underlying gross margin performance of the core chip business, so to say? Is it fair to assume that, that is improving as well? Or is it all due to the strength in the gross margin of the new acquired business? Pål Elstad: No, absolutely, Christoph. It's a good and important question. And I'm not going to give you the exact number for the effect there because that's -- then you can calculate the exact services number easily. So we're too mature -- no, it's too early to talk about that right now, although the services business are delivering according to what we said at -- when we introduced the acquisition. So going forward, we maintain our ambition to deliver the gross margins above 50%. And it all depends on the product customer mix and also how it's developing in the broad market. But it's, of course, obvious that the gross profit -- gross margin going up by 2 percentage points is, of course, it's also related to the underlying business, not just the services. That's clear. Operator: Next up is Martin Jungfleisch from BNP Paribas. Martin Jungfleisch: The first question is just on the -- just the visibility on the demand trends that you are seeing over the next 2 to 3 quarters. If you could provide some color on that? And then also, would that visibility, I guess, bring you to the targeted 20% revenue growth that you are aiming for over the next -- over the decade? And then I guess, what needs to change? Is it mainly a macro topic? Or is it something that you would need to see more growth of your customers outside of the top 10? That's the first question. Vegard Wollan: Yes. Thanks. It's a good question. We -- I think our visibility is -- I think it's fair to say it's more or less back to the normal lead time-based type visibilities, which we usually see in our backlog building and our forecast machinery. So that's, I think, what we say on the visibility. We only guide for the current coming quarter and not for the -- not beyond that according to our guiding institute as you are aware of. I think it's fair to say though that at our CMD last year in 2024, we communicated our long-term ambition to deliver annual revenue growth above 20% throughout the decade. Market doesn't behave linearly and perfectly according to that, as we all know. So -- but I think and we believe that we are clearly on track, both financially and most importantly for us with regards to renewing our product portfolio as most of what we currently are shipping is relatively old product as we know. And Nordic didn't launch so much product -- so much new products in -- between 2019 and 2024. And we have exciting times now where our customers are at least the fastest ones of them coming to -- coming closer to their releases and ramps, which we have said we expect to see acceleration of throughout 2026. Martin Jungfleisch: Great. And then as a follow-up, just on long range. I mean revenue is still quite strong. Can you just disclose if this is driven by a small number of larger customers or is it the broader market? And then can you disclose the long-range losses that you had in the quarter? I didn't see this in the presentation on the report. Vegard Wollan: Long-range losses. Yes. So long-range is currently a category of quite a few customers, it's fair to say. It's important to note that we have also added our nRF Cloud services revenue in that category, but we have certainly seen very positive growth and plateauing on a substantially higher level now than last year, which we are appreciative of. And we do see strong customer traction pipeline, particularly, as I mentioned, on the non-terrestrial networks, satellite additive technologies, which we are probably the leader in offering at the moment. Lots of traction in that space, which is giving us a design pipeline, which is making us confident in the growth plan for long range. Pål Elstad: And regarding to the question on the losses, you're absolutely good spot that the APM, alternative performance measure in the quarterly report has been removed because we haven't been discussing that for some time. So it's taken out. But if you want to look at the -- or how the operating is going for the long-range business in the quarterly presentation, we have both the revenue and the OpEx related to that business. What's missing is, of course, the gross margin, but there, we're delivering according to what we've been stating before. Operator: The next question will be from the line of Om Bakhda from Jefferies. Om Bakhda: Just a quick question on revenue phasing. When we look at the Q4 guidance, the midpoint implies an 8% quarter-on-quarter decline in revenues, which is in line with your typical historic seasonality that we've seen in the business over the past decade. However, if we look ahead at what consensus is modeling and pricing it into the new year, we see that those numbers are looking at above seasonal trends as we move into the new year. And as you mentioned, 2025 has been a particularly strong year. And so it would be great to sort of understand what would need to happen in 2026 for this momentum to continue? And then I have a follow-up. Vegard Wollan: Yes. It's hard to say whether we -- the quarterly patterns are still following some seasonality, particularly in the Consumer segment, which is still about 2/3 of our business, as you can see. So -- but again, these effects do not apply to all customers. And I think if you look at our last 12 months and last 9 months, you have seen a very substantial growth. This growth is mainly driven by the market and is consisting of our relatively old product portfolio predominantly. And of course, the premise for us now to see us reaching our target and ambitious growth plan going forward is, of course, that the product renewal, which we are in the midst of is happening. And the good news on that is that I think the Nordic team is executing very well at the moment. We are delivering new products on a multiple of them during a quarter at the moment, and we have done that now for the last about a year time. And as we know, some customers are moving relatively fast to production. Most customers are actually spending even 18, maybe some 24 months' time for their developments and design to be completed, certified, prototyped and ramped into production. But we are really excited about that phase now because the way we develop this product is obviously with our large key customers, and then we bring that on to the broad market, and we see that traction happening both with large customers and in the broad market. So that's going to be driving us growing more than the market and more than our competitors. Om Bakhda: Great. And then just on long-range revenue. So if we look back, we see that the revenues can tend to be quite volatile quarter-on-quarter. And so in this -- in Q3, we've seen that long-range has gone up about 30% quarter-on-quarter. And so what sort of gives you confidence that this performance in long-range is sustainable on a quarter-on-quarter basis? And how should we do things as we move into the fourth quarter? Is this momentum sustainable, that performance that we've had in the third quarter? Vegard Wollan: Yes. I think, of course, what we do see the design win and the customer pipeline, which are those moving to production in the coming time. That is giving us confidence that we are executing and on track to our ambitious growth plan and to be bringing our long-range business into profitability and with the growth rates, which we have communicated in that space. It's obviously all based on winning these designs. And then, of course, it's also fair to be said in long-range, these are among the more complex designs we are doing because you have cellular, you have satellite, you have multiple connectivity technologies you may connect to and the service providers, et cetera. So from a design and development time point of view at our customer base, they are also on the longer side on that. But still, as we see more and more customers now moving into production, we are confident in the growth in long-range continuing. Pål Elstad: It's fair to mention, also the 9151, which is a relatively new product, which has a more right price point for the customer is starting to ramp. And that's... Vegard Wollan: Yes, very good point, Pal. We outlined that sharpening focus strategy a year ago. And the 9151, which we launched in August last year was a very important first step of that, taking the cost down being the smallest module in the market, most -- and more cost effective, ultra-low power. And then the 92 Series, which we launch next year is taking -- 9251 is taking even a further step down in cost and up in performance. So really looking forward to that as well. Operator: Next up is Sébastien Sztabowicz from Kepler Cheuvreux. Sébastien Sztabowicz: One on OpEx because in Q3, it was a little bit above expectation. How should we model the OpEx moving into 2026? Do you have any kind of indication for us? That would be the first question. Pål Elstad: Sure. So as you said -- correctly said, total operating cash expenses were higher in Q3, $75 million in Q3 versus $63 million a year ago. This is partly explained by acquisitions, of course, but more importantly, positive effects of what Vegard commented in what we see stronger revenue growth in '25 than we expected a year back. So going more into the details, it's really relevant to compare Q2 to Q3. So we have the salary adjustments. That's, of course, a fixed number. We will go ahead. Second is, as we commented last quarter, the acquisitions are adding $4 million to cash or to payroll compared to the number we had in Q2. Then there's two more sort of variable numbers. First of all, of course, accruals for full year bonuses and security tax on RSUs adding $5 million, $6 million in the quarter. That, of course, depends a little bit on where the performance in and also the adjustments for FX also varies here. So in total, taking into account that we have a positive holiday effect on salary in Q2 and also in Q3, overall, we expect OpEx level in Q4 similar as in Q3. Sébastien Sztabowicz: And for 2026, it was my question. Pål Elstad: Yes. So absolutely. So looking -- we're not guiding for 2026, but looking at the Q3, Q4 numbers, I think, is a good basis. Sébastien Sztabowicz: Okay. That's very clear. And the second question is on the design activity with nRF54. You are quite happy with all the new products you are launching those days. Could you comment a little bit on the pace of design activity and also moving into '26, where you should start to see the first revenue contribution from the nRF52? How should we think about the revenue acceleration in 2026? Is it something very back-end loaded? Or you think you still expect something more linear during 2026, just to have an idea. Vegard Wollan: Yes. We appreciate the question and interest in it. I think it's -- for the first, it is a fantastic pipeline of designs and customers and projects we have combined now with our nRF54 designs, and just a few of them now started to see certifications in Q3. Whereas there is a fairly large pipeline of designs which haven't reached certification, obviously, at the moment. So I think that transitioning and that customer design and development time is varying a lot. There are some customers now in production, and there are some customers moving into production every week as we now stand. But obviously, there are going to be a lot more customers moving into production throughout 2026. But that will happen on a continuous basis throughout the year, such that the contribution within -- in the numbers is also going to be accelerating throughout the year. And we are really excited about this, and we look forward to getting into a phase where you guys are also going to see more of the designs based on the nRF54 and our new products. Operator: Unfortunately, we are running out of time. So I will now hand it back to Stale for any closing remarks. Stale Ytterdal: Thank you, Patrick. Before we conclude today's session, I have one announcement. Tomorrow, Thursday, 30th of October, we will conduct a total of two post-Q3 Q&A group calls with analysts and investors. One group call with European investors hosted by DNB and one group call with U.S. investors hosted by Morgan Stanley. These calls will be attended by Vegard Wollan, the CEO; and Pal Elstad, the CFO and the IR team, and will be moderated by the covering analysts at each brokerage. For detail how to register, please visit IR calendar on our website. With that, I will now close today's Q&A session and hand over to Vegard Wollan for final remarks. Vegard Wollan: Thank you, everyone, for joining us. Really appreciate it. And this concludes today's call. Thank you. Pål Elstad: Thank you.