I am delighted to welcome the Co-CEO Dimitar Dimitrov and Co-CEO Wolfgang Kirsch, who will speak in a moment and guide us through the presentation and the figures. After the presentation, you will have the possibility to place your questions in our chat box directly to the management. So let's jump straight into the numbers. Mr. Kirsch, the stage is yours.
Yes, thank you very much and good morning. Welcome to our Trading Update 2024. Thank you very much for the interest in Shelly Group. As usual, I will lead you through some highlights. I will lead you through financials and some strategic points, and Dimitar will take over the product part that is quite interesting this time. So just as a typical reminder, we are a smart home company. We are doing everything in the home, everything for industrial customers, from energy monitoring to optimizing your home. Why is Shelly an interesting investment case? We are in a positive market that is constantly growing, although in the last year the market was not growing in the typical speed, a little bit below. I will come back to that in a minute. We have a well-known brand in that market. Our technology is well- advanced compared to competition.
We have the right scale. We sold in total more than 20 million devices since we started with Shelly in 2018. We have a lot of upside potential coming from new segments, which we will enter. We have very solid financials. We have a good management team, of course, and ESG for us is not a burden. ESG for us is an enabler for making more revenue because we are helping companies to fulfill their ESG goals, and that is one of our revenue drivers, so let me come to highlights in 2024. In total, by the end of last year, we have sold more than 21 million devices, close to 10 million. We sold 9 million here in the last 12 months in 2024. We have now Shelly devices in more than 4 million households, and we have 1.85 million users of the Shelly Cloud.
Some highlights, some other highlights. Revenue growth happened in all markets above, in all major markets above the market growth. We have enlarged our distribution channels. We have increased our pro share. We are making now 30% of revenue with professional installers. In 2023, it was 20%. We have continued our regional expansion. The DACH team is expanded. Nordics team is fully on board, and we have prepared more countries to have full teams locally in the countries. We have designed 46 new products. We have launched at Light + Building last year our Installer Finder, that is a bit more than nine months ago, and we have now already more than 900 installers online in that Installer Finder. Just to give you a comparison, some competitors doing this for more than 10 years have like 2,500, 3,000.
We are really catching up very fast, and we will roll this out all across Europe. Our premium app has been launched successfully. The first Shelly X products are about to launch or actually have been launched yesterday as a proof of concept. We have visited trade shows, more than 25 trade shows all over the world. The main ones, CES in Las Vegas, Light + Building in Frankfurt, and IFA in Berlin. We have increased our addressable customer base significantly with the 1.85 million cloud users. The Shelly fan base is growing constantly. We have a social reach of more than 10 million last year. We have own Facebook groups with more than 150,000 members, and we have third-party Facebook groups with more than 130,000 members in a lot of countries: in Denmark, in Sweden, in Norway, in Finland, Netherlands, Spain, Italy.
All these are only Shelly groups, but not owned by us and not operated by us, and that shows the interest. If in Italy, for example, 40,000 people are talking about Shelly every day in their own Facebook group. Our community and forum has more than 130,000 users, and all the other channels sum up with more than 100,000, but the main point here is in the last year we grew our revenue with more than 40%, whereas the market, following our estimations and everything that we hear, was growing below 10%. We were outperforming the market once again by 4x , so now the short switch. Here we go. Our revenue grew in the last year to EUR 106.7 million. We already published that we have changed contracts with our main customers.
If we would have everything comparable, revenue would reach EUR 109 million, but we will continue with these new contracts that will have some impacts on the future revenues and gross margins. I will come back to this at the end. Our EBIT reached EUR 25.7 million. We have one special effect, not in the EBIT, that is in the net profit, actually. We sold our old office building. We made a profit with this of EUR 635K. Normally, this would be part of the EBIT and would bring the EBIT to EUR 26.3 million. In our case, we have sold a complete company that was the wish of the buyer. And this means that this amount is not EBIT relevant, so without that, EUR 25.7 million, with that EUR 26.3 million EBIT.
Our cash is solid with EUR 14 million, a little bit more than we expected during the year because we had some increase on the working capital that is still the main driver for using our cash. But right now, we feel comfortable with the level of cash that we have. And now let me pass over to Dimitar. He will talk about products.
Thank you, Wolfgang. Good morning, everybody. Thank you for participating in our quarterly call, and I'm happy to share the results for the whole year, not only for the last quarter. As you can see, we are growing not only by revenue, but we are growing very fast also on products release. In 2024, there is a 46 products updated to their latest version. There is a new 26 products, and there is a completely new one new category, which means that probably there is more than products in a week which is released or updated. There are not so many companies which can do that. For us, this is some kind of the trend, and we are still speeding up releasing new products, updating the old ones, and you will see in the next slides what we're talking about.
But totally now the company has 122 products until the end of 2024, and just beginning of 2025, we have a new release for the new product. Yeah, this one is released. Then something which is very important. Now in 2025 and 2026, we are in the fourth generation of the product. And if you are looking carefully on the picture, you will see that how the technology, how we are upgrading and adding the additional technology next to our products. From the very beginning, we have just a Wi-Fi as a connection protocol and MQTT for communication. Now slightly we are increasing, and just in five years now, we cover almost every smart home protocol which is used in the world.
You can see that there is a. I now will switch one by one to show the advantages of what we are doing now to be much more understandable why we do that and what we achieved with this technology and Generation 4 of our devices. We are talking now and later, just the next slide, I will show you the updates related to our application because we are growing our subscriptions and our subscribers. We are choosing the premium features of applications. Also, there is a completely new long range of the devices, which allow our devices to be used in the city environment, not only for the smart home and building automation. Something about the Shelly X, we just yesterday released the first products made by third parties, but which is using Shelly X as a platform for their own devices.
A little bit more about the Generation 4 of our devices. About the premium app, you know that we are starting this one just less than a year ago. Now the subscribers are increasing, but not only this one. We successfully implemented the AI features for our customers, which give them significant and very advantage, which usually is offered for the big clouds and very big companies, and also in much higher prices we are offering to our customers. The I/O modules, which give us the options customers to have data if there's something failing in their houses, if this is the lighting maybe is gone or the fridge has stopped working, then immediately our customers will receive the notification and they take care of their appliances on time.
We add optional data to understand if something is going wrong and there is an offline of their appliances and devices in their houses to notify them that something happens. Also something which is very important, we are opening a completely new world with virtual devices because with virtual devices, probably the customers can add and control from the Shelly App any kind of the other appliances and equipment from any other supplier and any manufacturer, which gives them infinite possibilities to manage their houses and to work and to make a much more sophisticated automation. The next one is the LoRaWAN. What is LoRaWAN and Shelly Wave Long Range? This is the two technologies.
One is based on the Z-Wave, another is based on LoRaWAN, but probably this is allowing devices to communicate with each other up to five kilometers, which opens a completely new area of the usage of the Shelly devices. This could be the agriculture or factory monitoring or street lighting or street automation or city automation. And now this release happens now beginning of 2025 during the CES in Las Vegas. The devices, the add-ons to the existing devices, because this is the still existing devices and the customers just need to add on next to them, opening a completely new opportunity. And we're expecting the huge interest.
We already have some projects with the municipalities where the device is used for the street automation for city, not only for the city lighting, but also for different kinds of the monitoring of the sensors, the air quality and everything, which is based on the Shelly devices using this LoRaWAN add-on. The same with the Wave. As you know, we are working not only for the Wi-Fi, but LoRaWAN, but we have the Z-Wave devices, and we are opening the newest long range protocol for the Z-Wave devices, which allows devices to communicate for 1.5 km each from the other, which increases also significantly the use cases for devices which the customers can use for.
Something which is very important, we're working very hard last year to achieve to have first customers for Shelly X and the first appliances, which is built and made from somebody else, but for communication technology and integration with the whole Shelly ecosystem and not only with any other ecosystem which is using the Shelly protocol, which at the moment is close to 400 different systems using the Shelly protocols and they are compatible with it. This is the first devices, a thermostat, a water valve, two thermostats, water valve, and a high duty relay, which is now from yesterday, they are placed on the shop and everybody can order them. Many more products are coming, which is much more bigger, complicated.
Probably we need much more time for a little bit more time for integration and also maybe a little bit more time for transporting these products from the different suppliers to our warehouse and also for them to release the products in their own shops, but probably this has opened the new world of the Shelly, which is not at the moment exposed. And now everybody can use our chip and module to make a, let's say, the old-fashioned or the devices smarter and not only smarter, but the smartest in the world compared with any other technology, and the Gen 4, the devices, the Generation 4, the latest generation of devices which we presented at CES in Las Vegas. The Generation 4 , the main benefit for this generation is that we add one more communication protocol to each of the devices.
Now the device is not only Wi-Fi booted, but also all of them are with Zigbee built-in, which means, and this is the big advantage, if the customers decide in the future to change the infrastructure in their houses and to decide to switch, for example, from Wi-Fi to Zigbee or vice versa, they don't need from the very beginning to think about what exactly device to buy for what kind of technology to use because our Generation 4 of the devices, they support all major wireless protocols, which are used widely all over the world, and there are also many other benefits for them because with the Generation 4 , for the first time, we released the Wi-Fi 6 devices. There is the newest Bluetooth 5.4 and the latest Zigbee Green Power and Zigbee 3.0 protocol, which is built in each of them. Yeah.
And for this, this is about the products. Basically, I can talk a lot for the products for each of them, but let's now concentrate on the financial update and our strategy for the next period. Thank you, Wolfgang.
Yes, very good. Thanks, Dimitar. So very interesting products to come that will help us to fulfill our targets for this year. But let's first have a look back. You have seen that chart at the very beginning. EUR 106.7 million is the official revenue number. EUR 25.7 million, or with the correction about the building, EUR 26.3 million is the EBIT of last year. EUR 14 million cash on the bank account. That's a solid basis for continuing our journey towards our North Star. That's the EUR 200 million and the EUR 50 million EBIT in 2026. If you look to the quarters, this is a picture that normally you only find in some books because it looks perfect. All over the quarters, we are growing.
Don't forget that at the beginning, I told you that the market is estimated to be around 10% or even below 10% in the last year, especially in the German-speaking area. The economy is not doing that well. So that's only some information we get from talking to competitors. I have some IDC data, but not very solid. But all signals are showing that the market is growing below 10%. Still growing, but below 10%. And we are growing in all quarters very fast. If we look to the EBIT, that should come now when I press here, the EBIT. That's a similar picture with this red dot in Q3 that I would eliminate if I could, but it's there. In Q3, we had a small dip in the EBIT margin. Just having 20% EBIT margin. In Q4, we had 24.8% EBIT margin.
So we are perfectly back on track, if you want, and we reached all our targets with that. So all pictures are solid, and that's just another sign that we have very solid financials. As well as this chart here, that's the regional share. The DACH region is losing a little bit internal share with 46.8%. But honestly, if I would have a wish at the beginning of last year, it would look exactly like that. Growing in DACH is the biggest region, a little bit underproportionately, 36%, still outperforming the market like 4x . Rest of Europe growing overproportionally, 47.4%, because we have some countries with a very nice development like Italy and Iberia. We have some very good first steps in the U.K.
The U.K. will be a focus for 2025 with a full-equipped local team that we expect to be there in the second half of the year. And the growth is accelerating in the first half of the year. The Rest of Europe was growing 37.2%. Over the full year, 47.4%. So that shows that all the measures that we are undertaking are paying back. The rest of the world, 54.5%, still on a very low level. Here we have very promising development in Asia. We started selling our products in Asia one and a half years ago. And now we see that the interest in Asia is very high, as well as in China itself. It's very high from end users and in some other markets in that region as well.
That's at the very beginning, but we expect very good development in the rest of the world, driven mainly by Asia and, of course, as well by the United States. The premium app, we have estimated at the beginning of the year a revenue from the premium app of EUR 770,000. We reached EUR 440,000. We are a little bit below here, but we are a bit above the expectations with the number of users. That means that if I make all the calculations for this year and the next year, we will reach the targets for 2025 and 2026. The effect here is coming from a longer period, a longer trial period where customers pay a little bit, start paying a little bit later. That's the effect that we see here. Nevertheless, if we just take the existing customers, we would not add more.
We will have a churn, of course. That means customers that step out of the contract, but we will have more than that arrive. Even if we take the existing ones, we are close to reaching the 1.2 million in 2025. So that looks very positive. And don't forget that this is almost 100% gross margin. So revenue equals profit. A little bit more in the details here in this chart. We have optimized our supply chain. We have as well a very good change in the product mix that has a positive impact on the gross margin. Gross margin with this is above the budget. We have significantly increased sales and marketing spends, mainly third-party marketing costs. So big distributors that are spending money for visibility of Shelly products in countries where we do not have an own organization. I told you before that that's paying back in revenue.
We expect the revenue growth to continue, but we made some changes in our distribution contracts that had an effect on revenue end of last year that will continue in this year. But it will have as well an effect on the gross margin and the marketing costs. So marketing costs will reduce and the gross margin will reduce as well. In total, the effect is neutral or should be a little bit positive for us because we are spending or we are controlling more what they spend the money for. We spend a little bit less via those channels with more control. And whatever we do on other activities, terms and conditions will reflect in the gross profit and in the revenue. The G&A is completely under control. And here, once again, the EBIT without the sale of the asset is 25.7% with the sale of the asset, 26.3%.
Net profit, 23.06% on a very good level. So 21.6% net income margin is as well an extremely good number. The cash flow, I have already told you at the beginning that we are close to the level of last year with EUR 14 million cash by the end of the year. We have increased our inventory significantly. So EUR 12.7 million more inventory, EUR 22 million in total. That is something that we will start optimizing during this year, but we expect first effects in the second half of the year, maybe only in 2026, because we want to be very careful, not risking revenue. And with all the new products that are coming, old products are still in the warehouse.
And we will continue, by the way, with the Generation 3 products over the full year, partially as well for Generation 2 products that we can use as fighter models in the market for more aggressive promotions. So all this is having an impact on the inventory, and we just start to optimize that. We have EUR 240,000 higher prepayment to suppliers in Asia, EUR 5.5 million in total. And then we have the effects that we already had during the last year. We increased our shares in Shelly Tech and in Shelly Asia. We have R&D investments of EUR 4 million in total. And we sold the asset that had an effect of EUR 3 million positive cash loan repayment, EUR 1 million negative cash dividend payment that we did middle of last year, EUR 2.3 million. And the equity ratio now is on 81.4%. That's as well an outstanding good number.
To the guidance. The guidance, just the achievement 2024 versus the guidance 2024, our target was EUR 105 million revenue. We reached EUR 106.7 million. Once again, EUR 109 million if we would not have made the changes end of the year in the customer contracts. The EBIT EUR 25.7 million with the sale of the building, EUR 26.3 million. The guidance was EUR 26 million. So as well here, we are on the spot. Everything as planned and promised. The guidance for this year, we start to have a range because it's quite complicated to always talk about a very exact number. We will achieve a revenue this year between EUR 145 million and EUR 155 million and an EBIT between EUR 35 million and EUR 40 million. And with this, once again, we are perfectly on the way to reach the EUR 200 million revenue and the EUR 50 million EBIT in 2026.
This is a ramp-up chart that reflects what Dimitar said before and what he showed before. We expect this year a different distribution of revenue and a different growth rate in the different quarters. In the first quarter, we expect a growth rate of 25%, only 25% if you look to our historical data of +30% or +40% or +50%, because some of the products will arrive in Q2. We have launched the Generation 4 devices at CES. All our distributors are waiting for the products. They are in production now, and they will be available for selling in Q2. We have some product launches in Q1, but the major ones will happen in Q2. We have sold the first small quantities of LOQED. That's the smart locks already in this quarter. This was a very small quantity.
The new quantities will come, and that will give us a small revenue push in Q2, as well as all the other Gen 4 devices that Dimitar talked about. And in Q2, in May, we will have a fully operating local subsidiary with a full team in Poland, one of our key markets for this year. And this is a very lucky case for us because we were able to find a fully experienced team very well integrated in the local Polish market, and especially for Z-Wave technology beyond the Polish market with a worldwide network that will really help us to sell more Z-Wave devices in all regions of the world and will enable us to be stronger in the Polish market. In Q3, we expect the next version of locks. So that means a cheaper version of the lock.
In Q4, we will have another version of locks that will be cheaper. We have a couple of key products. We expect, end of Q3, the next version of our TRV. That's the main driver for revenue. That's the valve for heating control. The Shelly Strip will be there in Q3. That is a product that the market is waiting for, as well a bit more expensive product than our typical average will drive up the average selling price, but we have very positive feedbacks from all our distribution channels. That's why we expect in Q2 the revenue growth to be on 30%, Q4 on 40% with more products, and in Q4, we will onboard one more country, most probably, will be the U.K. that will be equipped with a full country team by then. In Q4, we expect cameras, touch wood. That's a very complicated segment.
And we will have the next generation of our Pro devices. And we will have one up to two more country teams fully onboarded, and that will lead to revenue growth to 40%, so in total, 145-155 revenue, which is no big surprise if we are heading to + 200. That is the normal level that is in between, so let me sum up. 2024 guidance reached. Revenue target, the revenue was above target. Q4 margin higher than Q3, where we had a small dip, so we are perfectly back on track versus our 2025 and 2026 goals. The cash level is a bit better than expected. We feel quite comfortable with that. All regions are growing above the market. The market is struggling a little bit, still positive, still very positive compared to some other markets, but struggling with a little bit below 10%.
The regional expansion continues. We made a strong progress moving from the do-it-yourself market to the professional market, which shall not mean that we give up the do-it-yourself market. That's still our home, our base that we want to further develop. We have a wider product range that supports growth and more products to come this year. Our cloud service and premium app service have additional potentials and that will help us as well to stabilize the profitability. We confirmed the 2026 guidance with EUR +200 million and EUR +50 million EBIT, EUR 200 million revenue, EUR 250 million EBIT. We started measures to optimize working capital. We have since the 1st of January, a chief procurement officer on board. He starts already to show first effects in negotiating prices and in optimizing, further optimizing supply chain, saving some costs on the product side.
New product categories that will come and will support 2025 and 2026 growth. That is mainly the locks. That's the cameras planned for the end of the year. And that's maybe one or two other surprises that we have in the pipeline. So we feel quite comfortable with reaching our targets after we have reached the targets always in the last years. So if you want to download the presentation, you can do that here directly from our website, scanning the QR code, or you can do this from the Montega website. And if you are not yet subscribed to our newsletter, please scan here and do that. And now we are ready for your questions.
Thank you very much for your presentation and congratulations to your growing numbers and your business worldwide. We are moving on to the Q&A session. Please place your questions in our chat box, and I will read them out for you. As we have a lot of participants, please delete your questions from the chat box if it's answered in terms of content. And we already received some questions.
The first one is, what is claims to suppliers under other operating income?
That is a claim that we opened to our factory for failed products. We have a very low failure rate, but we did not have an agreement with the factory about how big this should be. But as we have a good partnership with them, we asked them to participate in the cost for returns, and they did.
And your working capital as percentage of sales is all-time high. What level of working capital do you expect to hold over the medium term?
We expect working capital to go down a little bit gradually. And I already said that we are working on that, that we are starting. We have a management plan in place. We'll work through this step by s tep. That will take some time. We think that we see the first effects in the second half of the year and major effects in 2026 and beyond. step.
Your advertising costs increased from BGN 6 million- BGN 30 million. What is the outlook for advertising costs going forward?
I already mentioned in my presentation that this will go down because we have spent a lot in the last years and especially in the last year and the second half of the last year to motivate distributors in countries where we have no own organization to do something for visibility of our products in their local markets.
They did that, but we will control this more and we will have smaller budgets for that we allocate to them. And we will ask them to have a case-by-case agreement with us so that this cannot be something that they just put in the prices, which might have happened in the last year in one or the other case. So we will reduce the marketing spends, especially third-party marketing spends, step by step so that we will see positive effects here in this year. But on the other hand, it paid back. So you see that we are growing, that we have a much better visibility. We have a good momentum in a lot of countries where we do not have a full organization. Like in Italy, we have right now one person in sales.
We see that in the distributor channels, in social channels, influencers, journalists pick us up and ask a lot of questions because we get a lot of visibility in those countries. That's partially coming from these investments. We want to reduce them a little bit in the next couple of months and one or two years.
Thank you so much for your question.
To clarify something, we don't talk about the absolute number of the marketing. Of course, this is the percentage from the revenue. Based on this one, we are expecting higher or similar amount of the money which you will spend for advertising. Compared with the percentage of sales, that will be relatively, which we will try to make it with a down.
Thank you. Congratulations on yet another great quarter. Thank you for taking my question. Can you speak a bit more to how the expansion in the U.K. is proceeding with NetXL?
That's a very precise question. It's going very well. So with NetXL, we have found a distributor that is doing a lot for us, that has the right size for us. So it's not too big, it's not too small. And we have people that are enthusiastic about our products. And they have done already a lot of positive things. We have won an innovation prize in the U.K. that they helped us to do so. So they registered for that. And we see that the revenue is increasing month by month in a very nice way. So what is missing now is more people on our side. We have one salesperson in the U.K. Together with NetXL and one other distributor, we are developing the market.
We see that we are onboarding more and more distributors and retailers, as well as distributors like Rexel in the professional market, Screwfix, and a couple of others. So if all this materializes, I see a very good year in the U.K. But we are at the very beginning. So we are still looking for our general manager for the country. Around him, we want to form then a team with marketing, technical support, more sales support to stabilize this development over the second half of this year and especially 2026, 2027. But first steps are very promising.
And which region or country in Asia is currently looking most promising?
It's China. It's as well Asia. We have in Korea, we have some first steps. So it's not one country that is really standing out. It's as well the visibility that we get because our Asian team visited three, four trade shows in different regions with a very good success and very good feedback. But we expect this to be quite strong, especially in China, Australia, and in a couple of other regions, sorry, a couple of other countries in the region. But as you've seen, the number is 8.5 million at the very beginning. But we expect that this is one of our potential growth drivers for 2025 and especially 2026 and 2027.
And are there more high price point products as the Shelly X, Wall Display and LOQED planned?
That's a question to Dimitar.
Yes, probably yes. But there is something which is important that the Shelly X itself, there are two streams of revenue. First one is from the chips itself. And relatively, because the chips and modules, this is not the price is the price for each of the modules is not so high as an end user product. We could not expect the very, very lots from the revenue. Even if you sold, for example, a million chips this year, this means EUR 3.5-4 million revenue from modules itself. But it's most important also is the second stream.
For part of our partners, which manufacturing the products with Shelly X, they're also asking us, could we help them with access to our sales channels? And we will do that. This is part of our program. But then we will have additional revenue, which will be quite higher than itself. And also the profit will be quite higher than just for the module one.
Because this we talk about the end user products, which usually the appliances, which usually the end user price is much higher compared with our relays and the devices. So it depends how we're looking for. But at the moment, we try to make the bot work in both directions. And we believe that in both directions will give their own benefits to make a higher revenue and good profit.
Thank you. And can you add some more color on how important partnerships are progressing?
You mean with Shelly X or in general?
I think in general.
In general. I can answer. Okay. So partnerships on the distribution side are developing very good. So we have a long list of distributors. I talked about the U.K. So it's not only NetXL and other main distributors, that's as well the channels below.
The retail channels and the professional distributor channels. We are, I think we are now very close to have contracts with Rexel in all European countries. That's still at the very beginning, so we are expecting the first orders. But the entrance in the professional market is developing very nice. As well, something that you can see with the development of our Installer Finder. I'm super happy with 900 installers signed in by the end of last year. I told you that there are some that have 2,500 , 3,000 but they are doing this for more than 10 years. This number is very good. We have officially launched this program in the DACH region.
We have a lot of participants in the Nordics already, in other countries close to DACH, but we have as well in countries where we have done zero for that. We have a couple of installers signed in, like in Portugal, in Spain, and so for everyone who lives in Mallorca, we have a certified installer now in Mallorca. We have in Australia, we have people that were signing in, and we will roll that program out, and that will open again new channels, so we are really happy. We are now with Leroy Merlin in Italy, in Spain for a couple of months already. We have signed now in France, so that will be the next entry point. We have a couple of other distributors in Spain and France, so that's developing very good and very nice.
We have as well some partnerships on the technology side that are quite thrilling. I think Dimitar can say something about that.
Yeah, I can do. Currently, our biggest company, for example, for solar equipment, inverters, panels, and everything, they are compatible with the Shelly device, and they're asking us to make some special features for them. They want to offer their own solution together with us, and then now we talk about the names. If you check the Huawei website, you'll see that the Huawei energy controller supports only Shelly devices. So part of their own equipment to monitoring the energy for the house and to automate the control of the devices, of the households, but based off the Huawei inverter and Huawei solar system. There are many other switches, the EcoFlow, so we have an agreement with Zendure, with the German one, SMA, which is very big.
Probably everybody now is asking us to integrate our device of partner, Anker SOLIX, which is the part of their own solution, which is the very hard driver for the future, especially for this part of the business and such a partnership. And this is the more and more biggest company. From another side, when we talk about, you're seeing that the newest car models, for example, the first one is the Porsche Macan, which is already equipped when you buy the car. This is out of the box. The car is coming with the Shelly App building, and the people can control the garage door and not only any part of the car, their home automation directly from the car. The new agreement is there with Stellantis and other car manufacturers.
We're just asking for the same features and more and more, which means in more third-party, I can say not only appliance because the car is not appliance, but equipment and products, our technology is built in from the very beginning. This is going faster and faster. Our integration team, during the day, they have many requests and they need to handle them and to decide which one to prioritize and which one to give access to our APIs, Shelly devices, and everything, which means this is one very strong direction.
There's one question directly to the Porsche Macan you just mentioned. Previously, you have mentioned the new Porsche Macan who will have Shelly installed. Do you see any significant amount of churn for the premium app when the trial period expires ?
I don't think this relates to Porsche Macan, this is everybody can use it.
Yeah. No, let's say the premium app. You will continue going slowly. As we said before, we don't want to push our customers to switch to the premium account at any price and cost because there is no. It's not usual for the smart home market. If you check the big players, Amazon, Google, Apple, nobody of them charge the customers for the services in their smart home application or displays. But on the same side, they don't offer them such rich features about the monitoring, energy monitoring, data storage, nothing. This is just some kind of the remote control, voice control from their equipment. And this is the difference that we are offering to our customers, much more features. And we try part of this feature to offer them at a reasonable price, but without pushing them.
We want everybody to understand because this is something which we are the pioneer in the world where we start offering such a service and mix between the free and premium accounts, and for us, it's much important to go in there carefully and not to be, let's say, concentrated on the revenue optimization or profit optimization. Anyhow, we are very happy with that because currently our cloud is almost paid off from the premium customers, which is our first target and it's already reached.
There's a lot of basic work that has been done. Just one example, the rating of our application in the App Store a year ago was around two stars. Now it has 4.5 stars, 4.6 stars, so there's a huge development. We have optimized our application and we'll continue to do so. We have now ready or coming an access for installers so that the installer can use the application in the home of the customer if the customer allows, of course.
So that's an easy access for the installers that will drive the professional business. So there are a lot of things that are going on with the application. And premium app is just the icing on the cake that will deliver some revenue. But as I already said, we are quite positive that we will reach more than one million revenue with the app, which is almost profit in this year.
Thank you so much. And can you break down which markets are driving the growth, particularly on the professional side? Any markets that are standing out? How is the development in the Nordics, like Sweden, Norway, Finland, or the Netherlands, for instance?
We are not reporting on a country level. That has a good reason. There's always some ups and downs. The only thing that I want to say here is that we have a north-south development, so the professional market is developing more faster in the north of Europe than in the south of Europe, but south of Europe is catching up. That's what we see. Maybe that has something to do with more do-it-yourself customers, less do-it-yourself customers, legal situations. But we see that in the north, we are ahead. That's what we mentioned a couple of times. In the south, we are a little bit slower with the pro development or do-it-yourself to pro. But on the other hand, as I said, Italy is our second biggest country and developing very good. In the Nordics, we see good development, solid development with not a lot of problems.
That's very solid and very good, and we are happy about that. We are not repor ting on country level.
Can you talk a little bit about the revenue model of Shelly X? Do you charge per Shelly chip sold, or do you charge a monthly fee or a combination of both?
Not a monthly fee. There are two models, but they are not against each other. First, we charge the customers which want to use the Shelly X just one time. This is including the lifetime usage of the cloud and infrastructure of the Shelly, local control, everything, the future upgrades of the products. This is already built in there. What is the difference?
And the Shelly X will also enable customers to choose a little bit and to connect their appliances, not only to our cloud, but also to their own cloud if there is, or to their local system. Which means we're expecting half of these devices to be connected to our cloud, but half of them should be connected to something else that the end customers who buy the appliances can use. And that's something which is a very big benefit for the manufacturers. And this big benefit that we offer them, the part of the premium, the revenue share from the premium services and premium account from the app.
As an example, if somebody has 10 Shelly devices and one of them is powered by Shelly third-party device and these customers paying the premium subscription, then we will share on the equal level proportion. We will share the premium subscription revenue from this manufacturer. And at the same time, manufacturers can allow their customers, if they're premium customers, to use some extra services with their appliances. So it's a mixed solution. Then we charge from the beginning for the one time, but then we give opportunity for manufacturers to build in their own, let's say, extra services which bring the additional revenue from their customers to use and we share with them. And this is the model right now.
Thank you so much. Your competitor, Plejd, has seen a good revenue momentum in the home market, Sweden, improving from a weak period in 2023. From a competitive standpoint, does this have any impact on your sales dynamics in this market?
Yes, it has a positive one. So what we hear from Swedish installers and Swedish wholesalers is that Plejd is becoming too strong for them. And that's why they look for alternatives. So on the other hand, Plejd is a very good company, a competitor that we take very serious, but we are not afraid. So the market is big enough. They have trouble to leave or to make the same success outside of Sweden. Even in the Nordics, they have some trouble. And in Sweden, in some of the channels, they are too dominant, which could help us to enter. So we see a good and step-by-step development in the Nordics. Plejd is not having a negative impact on us.
Yeah, I can add this one.
I think it's the positive impact for another reason. Plejd is mostly concentrated on lighting. We are not. There is no garage door controller. There is no energy monitoring. There is nothing. So many things which we have in our portfolio. And this is good that somebody else is opening the eyes of the customers and opening the market. As I say many times, if there is no some Chinese companies like Sonoff and other before us, maybe we will not be so successful because the first people need to see, somebody needs to show them what exactly is the smart home, not only to them, also to installers. And I think Plejd is doing a very good job to do that in their markets.
Customers, many of the customers are using both technologies, the Plejd for the lighting, and because this is very, let's say, highly reputed in these countries. But this is not enough. If they're looking for any third-party solution, then the Shelly is almost the company which everybody recommended as everything else, which is for us, this is good.
Two more questions. What is the share of revenue under contracts with revised terms? Can you disclose which regions do they cover? What is the period and if you have planned to renegotiate after a certain point?
If I understand this right, that question goes in the direction of the change of our contracts with our distributors. We did this in the last year, in the last quarter, and it's about all regions. So that's just changes in the contracts. How do we name things?
How much do we give them for what? And that's what I mentioned during my presentation. That will this year be applied for the full year. We will have a bonus on target with all of those customers that will go against the revenue that will reduce as well the gross margin. On the other hand, we give them less marketing spend that will reduce our marketing spend in percentage of revenue. And it's perfectly under control. So that's all regions, more or less, no, not all distributors, the main distributors. And that is perfectly under control.
And just to clarify, both you and your partners will be selling Shelly X devices. Does this mean you will be running inventories of these products? How does this impact VC?
Yeah, we expect that partially, yes, from the very beginning because we have a very big upsell potential. If somebody has already a Shelly device in their house, and definitely if there is a third-party equipment powered by Shelly, which can be used for different use cases, which we don't cover now. For example, currently, we don't have a special water control, water temperature control. Thermostat is something which is not existing in our portfolio. Then it's normally we to help and support them to selling the devices to our existing customers.
And of course, some nuance. And this is coming through our warehouse and the warehouse of our distributors, as usual. Yes, this requires some additional investment for the quantity in the warehouse and the stock, but not so much because there's a kind of a little bit different deal. We can have payment terms and everything could be much more relaxed because then this is not only our product. It's just powered by Shelly. So there is a mix, and we don't expect for this one to have a significant impact, but there will be something.
It's as well a question how this evolves over time because right now we are in the first steps. That's more a proof of concept than a huge business already. I cannot imagine that tomorrow if Bosch-Siemens or one of the other big players in home appliances would move to a Shelly chip instead of whatever they have in their devices now that we start to sell washing machines tomorrow. But right now, we have products that are very close to what we do, like the relay that you have seen, 25 amps, water valves, and that's products that we don't have in our portfolio and that fit to our portfolio. So, if tomorrow we will not start selling Porsche Macans just because they have our app i n the display.
And we don't need to have them in our warehouse.
We have no special prices for shareholders. That's unfortunate.
Absolutely.
And what's your outlook for the company for about 2030?
Oh, if you have seen our presentation at the Capital Market Day last year in Frankfurt, you are pretty much aware. And there are no changes. So we see that the market is continuously growing. We plan to outperform the market as we did in the past. We will not give a concrete number for 2030 because that would not be serious. But everything that we have in the pipeline should help us to continue growing way above the market. And then we will see where we are in 2023. We will add more categories. We will start monetizing data, but all this is down the road, so that's something beyond 2026, 2027, and this is additional fantasy to our numbers and our development.
And don't you think it would be better for investors to buy back shares instead of paying dividends?
Yes, that's a very good question. Of course, we have constant internal discussions about dividends because the dividend payment from Western European point of view is something that investors don't understand. In Bulgaria, it's something that investors want and they plan with. That's why in the last year, we paid a dividend of BGN 2.3 million. For this year, we will see. We have the shareholder assembly that will come in June, and we promised to Bulgarian shareholders to pay dividend on a small level. Buying back shares would be counterproductive because that would reduce the free float.
Buying back shares is not easy in Bulgarian legislation. That is something that is, I don't know if it's anyhow possible as far as I think it's not. Again, at least not in an easy way. It wouldn't make sense because we want to increase our free float, not reduce it.
What is the Pro devices approximate share of the revenue? Are they mainly bought by professionals or also by DIY?
Yeah, they are bought partially by DIY. They are mainly bought by professionals. Now I have to admit that I don't have the number in my mind. But you have to keep in mind that our DIY customers, a lot of them are engineers. They know what they do. That's why we cannot really say. I would not, as a do-it-yourself customer, I would not install a Pro device.
I would not touch the central breaker box. But there are a lot of people among our customers that have the knowledge and as well the education and the right to install that in their homes. So that's why we cannot exactly say what is going where. The share of Pro devices is nice, but it's not the share of Pro device that is defining the Pro device, sorry, the Pro channel revenue. Because a lot of the installers are installing our normal devices behind the wall switch. There is no Pro version of that. But it's complicated to say, and I do not have the number now in mind. It's maybe like 10%, but it's just a guess.
Thank you so much. And the question especially to you, Mr. Kirsch. The last two months with the election of President Trump, the world had changed geopolitically because of some of his decisions. Do you plan to change your strategy in the U.S.A and China? Can you give us more details about the development in China and Asia? Thank you.
I think I talked about the development in China and Asia for us a lot. So currently, our main market is in Europe. We do not see import duties coming for Chinese products to Europe. If yes, we are prepared. We are as well prepared for import duties to Chinese products for the United States. We will come back to this in the next earnings call for the first quarter because we have some concrete things in the pipeline that we will share then. A bit too early to talk about that. And I don't want to enter a political discussion.
If import duties on China products for the U.S. start, that will hit everyone that imports products from China, us as all the others. So the prices will go up. And this is not the end of the world for us. So once again, Europe is our main market. We have a good development in the United States, not a perfect one, but this is not any risk for the company.
And do you plan to take part in the Japan, Osaka exhibition?
No, not to my knowledge.
Next question. Hello, congrats for the nice results. I have two questions. It seems like with the scaling up in some European countries, yes, Rest of Europe will be the biggest region already in 2025, as we have mentioned. What type of revenue growth is expected in this region for 2025? The second one, given the forecast about improving working capital efficiency, the FCF in 2025 should be on really good levels. What about capital allocation plans? First, I have to ask which region was the question?
What growth we expect?
In Europe.
In Europe, I mean Rest of Europe or I mean I can answer both. We expect to continue growing a bit faster in Rest of Europe than in DACH. But as well in the DACH region, we are at the beginning of our development. So if we look to some competitors, we talked about Plejd before. Plejd is doing like EUR 60 million in Sweden. I mean, Germany is 10x as big as Sweden. So there is enough room for us to grow in the DACH region. But outside of DACH, because we are at the beginning of the development, the revenue levels are much lower.
We expect a faster growth than in the DACH region, so in general, Europe stays our region that will carry the company, and as well about working capital, we talked already a bit, so working capital is high. The inventory level is high. We expect to keep it on that level for the first half of the year, and then hopefully, measures will pay back that in the second half of the year, we can reduce it a little bit. The main effects we see in 2026. I hope this answers the capital allocation, so the main profit goes into the working capital. There are currently no concrete plans about acquisitions or something else where we would need a lot of capital.
Thank you so much, and please have some patience. We have like 10 questions ahead, and the next one is, what about Shelly X partnerships? You have four powered by Shelly products on your webshop. How many more are coming in 2025?
I cannot say how many is coming. And also for me, because there is some kind of the NDA and some biggest name companies, they don't allow to share their plans to switching to Shelly X. For this one, it's hard to say how exactly how much is the revenue, how much products, how many products. Yeah, that's the question, which is I can say any numbers and could be, let's say, correct or not. It's hard to say. It's too early to say and to see how this develops. And also, unfortunately, really, we're not allowed to share the companies, the future partnerships with the most bigger and our own companies.
Yeah, but what I can share is the revenue share and contribution of Shelly X for 2025 is still very low. So we are not expecting huge effects. So that means that the company development will mainly be carried by the normal Shelly products, the new products in the pipeline. And Shelly X is still in the first period. We are happy with what we achieved so far. We see some first revenues this year and, of course, in 2026, but this will not explode. This takes time because all the big companies, Dimitar mentioned that we are not allowed to disclose with whom we are talking. All of them have huge engineering teams. All of them are very careful changing technology platforms.
Although everyone says we are not happy with what Tuya and some others are doing, making this step is a kind of a step into a way that has no return. That's why they are all very careful. That will take some time, but in the long run, we think we can make some big developments in revenue there, but not in the short term, so not 2025.
Thank you so much. Did you expect professional sales to surpass geek sales? And what are your expectations for Shelly X for the next two to three years in percentage in your sales?
So we are not, as I said, we are not disclosing percentage of sales of Shelly X. We expect a very slow development step by step. We are not making crazy things. We are building up teams. We have the first product that's more proof of concept for us than anything else. So that's on the way, and that's continuing, but too early to have clear targets that we publish.
Yeah, I don't know. That could be not so successful, but at the same time, because really, there is some kind of the missing technology which we deliver is not missing now until now. It's coming mainly from China. And Tuya, which is our competitor, just a single agreement with some of the big manufacturers could completely change the picture. And we're working on that. And if you ask me, but it depends. We cannot tell what is the expectation because really, this is something which is in development and very active development. And we talk with so many players.
If you put just the 50% of them on the list, we can say, oh, maybe double, triple of revenue, but this is not realistic. For this one, in time, we will start updating these numbers and everything. But now, really, except what we show, the first products with nothing more to be shared. So if I understood the second half of the question right, the share of Pro devices? No, I'm sure.
Of Pro devices, I would say this will step by step grow. So four years ago, we had 100% DIY and 0% Pro. Then we started with the first Pro devices. We started to have 90%-10%, 80%-20%, 70%-30%. So now we see as well that in DIY, we are opening more and more channels and more and more DIY stores like Leroy Merlin and a lot of others show interest.
We have a listing now finalized with online and the physical stores for OBI. And they will roll out beyond Germany very fast. So that's all drivers for the DIY business. So I expect that the shift to Pro will slow down a little bit. So I do not expect 10% more share every year. But of course, we would be happy if that happens on top of the DIY development. So it will take some time, three years, two, three, four years until we reach 50-50 or come close to 50-50. Still, again, DIY is our core and our... And we do not want to risk that.
Yeah, and this is by the numbers because when looking at the revenue, the picture is a little bit different because the Pro devices is much expensive than the retrofit one, the do-it-yourself devices, which means but based on revenue, the numbers could be changed much quicker than the number of devices which we sold.
Thank you so much. Congrats on the incredible consistency on impeccable execution. Since Shelly devices already notify users about fridge problems like open doors or malfunctions, could we consider expanding into a service that collaborates with insurers to cover risk like leakages, heating, or AC failures and other major appliances breakdowns? This could open up a huge new revenue stream with recurring revenue and establish Shelly as a leader in comprehensive smart home solutions.
Yes, we could imagine a lot. We can as well imagine revenue streams coming from this.
But this is nothing that we have in concrete plans currently. So we are starting to have first talks to some insurances about what can we do with this information, but it is very early stage. So that's too early to say. We have as well with some retail chains, we have very first test projects. This will not lead most probably to recurring revenue, but to revenues to install Shelly devices in their fridges, in their stores to give them early indication about maintenance. So when does a deep fryer or a refrigerator in a food store needs maintenance because it needs more energy? And that's most probably because the ventilation doesn't work anymore. So there are a lot of things. We have to be careful that we are staying focused. We cannot do everything at the same time.
Whatever we do would need resources, would need people that will need like six, 12, 18 months of ramp-up time and would have a significant impact on the habits that we promised to all of you. Yes, we are working on a lot of these things, and especially, of course, in our biggest region in DACH. We start first talks to energy providers as well to insurances. We go in other verticals that could open revenue streams. There are a lot of activities, but if we put everything on a table, we would immediately say, let's concentrate on our core business because it's simply too much. The sky is the limit. I completely agree.
Probably this is partially the job of our distributors and our wholesalers, which they are actively working on the markets and knowing especially the situation on the markets and the players on the market. They're working on that. We help them with everything. Of course, if there's something which we can do faster and we can negotiate quicker, we can go in that direction. But really concentrating to spending money in completely, let's say, separate vertical of the business because there are many which we can cover. And it's something which is first need of time, then need resources. And really, we prefer to stay focused on the technology, manufacturing the smart devices, which could handle any case, including the insurance one.
Thank you so much. Previously, you have spoken to the challenges in the past when you have approached professional installers in the U.S. market with do-it-yourself products. This you have changed now, but can you speak to the challenges you are currently seeing with the U.S. expansion?
Trump? It's maybe one challenge, no, seriously. We had a CES with a very good success. CES is an international trade show. It's not a purely American trade show, but we had like maybe 70% international visitors, 30% from the U.S. And more than ever before in the last years, we have interest. We have people that know Shelly. We have as well key decision makers that are Shelly fans as we have in Europe. And that's still a step-by-step development. So we have a contact to an installer network that we have talks as well to train the installers to create demand on the market. But the United States is a huge market.
It's a market with a huge potential, but that's part of we have somehow to concentrate. We cannot do everything at the same time, and with the same investment in time and money and resources that we have to put in the U.S., we get much faster results in Europe, which does not mean that we are not committed to the U.S., so we are continuing, and we still need some more United States tailor-made products.
Yeah, I think I can add that as a company, we are also working to meet the expectation of our investors, and what this means for the U.S., there are two ways: quick and expensive. That easily we can spend the whole budget in the United States and it will not be enough.
But then maybe in two, three years, the United States market will be bigger or five years will be equal to the European market. Another way is not to spend so much money to concentrate on balancing the company to be on the really safest and smartest way, still not with a very good growth rate. And to work in the United States extensively, but without investing so much money, for example, for advertising or hiring the big teams and to see what they can do, just to follow the... And this happens. What we see in CES, I won't say many companies already know about us. Maybe a company asking us for the potential partnership, distribution channel, and everything. But the market is big. And such big companies, they are so small. And they're doing everything so small. And this is somehow affecting the speed for the United States.
And this is the way which we every time choose not to run into some direction and to spend everything which we can have in that direction and to make a much more balanced approach to every market.
Thank you so much. You mentioned Rexel at European scale in terms of distribution. Rexel usually onboard supplier country by country. Can you give us a bit more context about your relation with Rexel?
Yeah. Rexel is typical as all the other distributors that serve the professional channel. They are doing not only country by country. Sometimes they even do region by region in a country. We are talking to them on a country level. We have contracts in Germany, Austria, Finland, some other Nordic countries. In Nordics, there are other key players in this market that we have signed on already. So they are bigger than Rexel.
We have a contract that is close to signing for France, Italy, U.K., so we are making step-by-step progress, but it's very slow, and having a contract does not mean that we can expect millions of revenue. It needs training for the people. It needs as well further investments on our side for visibility in their channels, in their local outlets that they have thousands in Europe, so that's a long way, and they are a typical, very slow-moving channel that takes everything, takes ages. They are so used to always working with Schneider, Legrand, Busch-Jaeger, ABB, and those guys about the last century almost that it's really tough to change their attitude, but we see some good progress. It took us now two years to sign a contract in Germany. It was much faster in other regions, and so we expect that in 2025, we see some revenues.
But as we are not disclosing regional revenues, we are not disclosing revenues on customer base. So we will not talk about individual customers and revenues we do with them.
And also to revenues, can we expect inventory in relation to revenue to fall in 2025? Inventory had tripled in 2024 while revenues went up 40%. Kindly indicate a ratio to sales that we can expect in 2025 and maybe your target going forward.
So we have increased the revenue significantly so that a lot of our money is going into working capital. And that's what I mentioned a couple of times today and as well three months ago in the last earnings call. We are working on reducing the inventory or, with other words, turning the inventory faster. Right now, we have five months of inventory, round about five to six.
We want to bring this down to at least four to five in the first step, and that should be possible in the second half of this year. And then with further optimization in the next year in 2026.
Yeah, at the same time, do not forget the new products is coming. The product portfolio is increasing, which means we need to add also these products to be available on the market, and we have to have them in the warehouse, which this is the, let's say, the one versus another. We need to optimize to optimize the working capital. But this does not mean that, for example, in some situation where there's a huge demand on the huge pre-orders, something for devices, temporarily we will not have a much higher stock than usual. And also the vice versa. But we do not expect that the stock level doubles again.
Thank you so much. And the last question, especially to heating. Can we expect underfloor heating control systems and heat pump control devices?
We're expecting powered by Shelly heat pump control devices. There are three players, which we're working, manufacturers which we're working with them. One in Europe, two in Asia, which is interested in testing the technologies. Probably this for this heating season is over, b ut usually heat pumps also are used for cooling, not only for heating. And there is a probably we expect because not only for us, it's also for them. And from them and their capacity and decisions. In the best case, we expect next heating season they're already there to be powered by Shelly devices, which we will offer into the market. In that, let's say, direction.
Thank you so much. We have received no further questions. And in the face of time, we come to the end of today's earnings call. Thank you for joining and the lively conversation. Should further questions arise, please feel free to contact Investor Relations or us anytime. A big thank you also to the gentlemen for your presentation and the time you took to answer the questions. I wish you all a lovely remaining week. And with this, I hand over again to Mr. Dimitrov for some final remarks.
Okay, that's very cool. Okay, yeah. What I can see, really, we've seen a lot of potential, a lot of opportunity every day. Not per quarter or annually, but every day. And for this, much harder, the main decision is where to go and how to stay focused on the main channels and main products that we're doing now.
Maybe for some of you, could look slower, but don't forget that there are not so many companies, especially also in the smart home area, which are growing the revenue as a percentage and the speed as we do that. This requires a lot of extensive internal work also and redesigning all the time the company to be able to achieve the results. But yeah, from what I see, everything is going in a very good direction. And let's say we can wish you also a good day and a good week a nd see you next time in three months. Thank you. Bye-bye.
Thank you. Bye-bye.