Good morning from our side as well, and thank you for joining our Q1 earnings call. As usual, we have a couple of good news. This is the typical agenda, so I will start with some highlights. Dimitar will lead through the product session, a little bit different this time with some more information than you had before. I will come back with financial details, and at the very end, we are open for questions, of course. This is the typical reminder of what we are doing. For those who are new to our call, we are a smart home company, a smart connectivity, smart building, energy optimization, however you want to call it. Whatever happens in your home is done by us with our help. You will see during the presentation that this is taking different levels. Some highlights.
We have sold since the start of Shelly, that was in 2018, now more than 23 million devices. In the last 12 months, we have sold more than 9 million devices. We are in more than 4.5 million households, and we added 1.5 million households in the last 12 months. If I say households, let's maybe better call this installations because there are some industrial installations as well. By the end of March, we have more than 2 million cloud users, and we added more than 700,000 in the last 12 months. That's all quite impressive numbers. Some other highlights: our revenue and our EBIT is above budget and above the guidance. You remember that in the last call, we said we expect a growth rate of 25%. We were a bit above. We are growing in all markets above the average of the market.
It's always complicated to get exact numbers because market research data is not available. If we talk to competitors, if we make our own estimations, some regions are suffering. We are everywhere above the market. We have increased significantly our premium user app number. You will see that at the end. We have successfully enlarged distribution channels in DIY and as well in p ro in all of our countries and regions. We have a significant growth of addressable customer ownership coming, of course, with the cloud users where we have contact data, and most of them we are allowed to contact, and we are contacting them with data every day, if you want. We have sold the first units of our new Smart Lock product line with very good success. It was only a small number of pieces, like 1,000, but they were sold out in no time.
We started one year ago our Installer Network, and we have now more than 1,200 participants in less than one year. That is as well quite nice. That is just a picture with a lot of logos on this, just to show you who joined as a distributor and retailer in DIY and in professional in 2024 and in 2025. For 2025, this is signed contracts or close to signing contracts. We are continuing to add more retailers in regions, especially as well outside of the DACH region where we are already strong in Nordics, in Southern Europe, and we have quite high demand on this side as well. That is very promising for the future. It always takes a little bit of ramp-up time to see real big numbers, but that is quite positive.
On our I nstaller Network side or Installer Program side, I said already at the beginning, we started at the Light + Building in March 2024 with zero installers on our website. Now we have 1,200. Officially, the program is live in the DACH region and the Nordics, but you see that it's already spreading around, and we have a couple of hundreds in the waiting line. It will be significantly more over the next quarters. We have agreed on starting phase two. Phase two means we will localize that. We will have the trainings in local language. We will do this with an automized program where as well the installers at the end will have to run a small questionnaire, a small test.
We see that having this in local language, as we did in Denmark and in other Nordic regions, really helps to increase because most of the installers are not very good in English. The demand line, the queue is already very long for that. Last week, so that's not from first quarter, but last week we had Intersolar in Munich, the biggest or one of the biggest European trade shows for solar business. We already knew that the companies you see here with the logos, that they use Shelly devices, that they have integrated Shelly devices in their solutions. That's very good. What we saw at Interzola is that almost every company in the solar business offers, of course, their own energy management system or Shelly.
At 30 or 40 of the booths of our solar producers, you saw the typical sign, "We have our Huawei energy management system," or you use Shelly. Our devices were as well displayed at 30 or 40 other booths than our own. Very positive feedback as well from the installers. All of them, really all of them, said, "We have a very good product, very good to integrate it, and we are far beyond the past in 2018, 2019, where we were considered as a do-it-yourself brand with a couple of small hiccups maybe that geeks like, but the professionals not. We are way beyond that step." That is a super positive feedback and opens a lot of roads and doors into the next future.
If we consider solar business as one of the verticals, because that's a very specialized business and an entrance door for us in the home automation, we are now talking, especially in the DACH region, to other companies. Companies that produce motors for garage doors, for shading systems, for roller shutters. Of course, you can always include a Shelly afterwards, but if this is compatible from the very beginning, that opens new markets and increases the number of households and users. We are talking to the first insurance companies. They could possibly use our flood to detect water leakage to avoid big damages, smoke detectors, water valves, or other products, and include this in their insurances. There are businesses like this in some countries in Europe. We have first contacts not only here in Bulgaria, but as well in Germany to some of the insurance companies.
That will take time. That's nothing that will happen from one day to another, but that's more things that will pay back in 2026 and in 2027. On the security side, we are in certification process. Some of the processes are already finished with the worldwide big companies like Alarm.com, Resideo, Ring, ADT, and a couple of others. They are offering typically the high-end security systems with professional support, and they are all trying to get as well a position in the smart home business. Because if the installer, they're installing the alarm systems, he could as well install relays and roller shutter steering and other devices. That is potentially another vertical, and we have much more different verticals in our mind that we will address in the next years. One thing after the other, it's as well a question of resources.
In January, as in every January or February, we ran our customer survey. We asked Shelly customers about what they like about the products, what they use the products for, what is the advantage of Shelly from their point of view, would they recommend Shelly devices to their friends and partners. In this year, we had a record number of participants, 52,234 to be exact. That is amazing. If you have some information about market research, usually you have numbers like 1,000, 2,000, 3,000 people that you asked. We asked more, of course, but 52,000 participated, so that is very, very reliable numbers. I just want to point out two important things. We have an NPS score. If you ask the people, "Will you recommend Shelly system and Shelly devices to your friends?" the NPS score is 55 and went up five points versus last year.
That is very good. We think that we can still increase that, and we will increase that over the years, but that is a very good basis. The second thing is our application. The Shelly app last year was rated, let's say, okay-ish, and we grew within 12 months only 21 points in NPS to 23. That is still not breathtaking, but compared to competitors in the market, we are well positioned. If you make a double check with the app stores of Google and of Apple, you see that our rating now is above four stars, whereas it was 1.8 or so a year ago, and it is well above most of our competitors. On top of this, very important information, 20% of our customers are considering a premium upgrade. That is something that leads to recurring revenues and software as services, and that is quite promising as well.
Now, we all know from asking a customer, "Are you willing or are you considering to move to a paid service?" and then actually to move them, that's a very long way. Usually, you lose 50% or more of them on that way. 20%, or even if it would be 10% or 5%, that's a very, very impressive number, and it looks quite promising for the future. Now to the hard facts. We grew in the first quarter 29% in revenue to EUR 26.5 million. That is above the guidance because we said we want to grow 25%. That is as well above all our internal targets, and that's quite positive.
We think this is a good and solid basis for the next quarters, but we see this as well as a reserve because we will not know in the current circumstances in the market how the next quarters will deliver, but we will come back to this at the end. Our EBIT grew as well, 23% to EUR 6.7 million. We have an EBIT margin in Q1 of 25.2%. This for me was as well a very positive development because with only growing 25% or 29%, so that's below the planned average for this year. We expected that the EBIT will be a little bit lower, so as well this is very promising that EBIT margin is above 25%. We improved as well our cash position versus one year ago, and you will see as well versus end of the year in the later chart by 11.9%.
The first steps that we took to improve our working capital show the first results. We are at the very beginning with that, but we have as well secured with a bank an overdraft that we can use if needed. Currently, we do not need it of up to EUR 20 million at very good conditions. As you know, a bank line is only paid or a very small proportion is paid to have it available, and more is only paid if we actually need it. We hope that we do not need it or we do not need much from that, but that gives us a lot of security for the coming months and years because if cash is a limit for growth, we will have the possibility to take some of this money. All promising, and now we have some information about products from Dimitar.
Hello, good morning.
Nice to see you there. Let's talk about the products and what happens in the Q1 and what is the next. The first one, what we want to show, this is the new products updates for 2025. We have five product updates which are coming this year and seven completely new products. And just for the first three months, I think we're completely following the same pattern as a year ago. Now we're still planning, and this is in the pipeline, is 40-60 new products. It depends. Some of the products are a little bit complicated. Some of the products need a more long-term certification process. Anyhow, we're completely positive that we can reach around 50 products to end of the year. At the same time, we start discounting the old products, the very old products, which are the Gen 1 products, partially Gen 2 products.
On the market, it's mainly coming the newest new releases and new products and new updates which we made a year ago. As you see, this is our target for 2025. During the Q1, we already released our products as a double screen, dimmers, our DALI controllers are available on the market, and everything which we promised a few months ago. In the Q2, which is already ongoing, you can see that we already have our first, our generation four of our devices, which is amazing. By the way, everybody is excited because nobody until now made devices working in all kinds of the most important protocols, meaning the Wi-Fi, Bluetooth, ZigBee, Matter built into the same device, and the customers can choose what kind of technology for connectivity technology to use and what kind of the protocol.
Not only the Shelly 1L and 2L, for the first time worldwide, there is the double relay power using the Wi-Fi network, does not need any kind of hub with Matter enabled. It is something which we released on the market last month. This we expect to drive our revenue and our results much better. The Q3 is coming where we see that if the Q2 is mostly to update the Gen 4 devices and do-it-yourself products, then in the Q3, we will be focusing on the plug-and-play products for the customers. As you see in the picture, there is a power strip. There also will be a power strip with USB charger. There will be a very special presence sensor with very fancy features.
In Q3, we will be preparing and targeting, and we will be preparing to targeting the customers for Black Friday and for the last quarter where most customers and customers which are not so tech-savvy will start looking for the smart products. Q4 is still in line where we're planning our new lock system where we're looking for the first camera to be released on the market. By the way, there is very good exciting news about the cameras because development is going very well, and we have a very strong partner which helps us to bring the camera at a really professional and very high-quality level. Something also which is interesting, many people ask us what between the generation, how the people switching between the generation, how the revenues relate to this generation.
We can show here that in the last four years, we have four different generations of the devices. You can see that in 2022, our main results are coming from Gen1 , which is 23. Our revenues start coming from Gen 2 of the devices. A year ago, we still have a little bit more from Gen 1, mostly Gen 2, but then Gen 3 is on the way. This year, everything is repeating, which means that margins are related with the new generation, with the new products which we develop. With our new products, we can reach because this is not the same clients which are switching between the generations. Still, the clients using the Gen 1 of the devices are our first client.
This means that with our new products, we are able to reach new people, new customers, new markets because we make our products widely compatible and much more functional than four or six years ago when we started with this one. Now we prepared a little bit of product comparison to see because there are many questions, why Shelly? There are many other brands, why Shelly? The first one, something which is number one worldwide. This is the smallest mini relays, which for most people, one of our most important markets is the retrofit market, where people do not need to change anything in their electrical installation, but they want to make their houses and buildings smarter. The size matters. Smaller size, they can do more, they can fit everywhere.
As you've seen here, the closest competitor to us, which is the SONOFF size closest competitors. As you've seen, our size is smaller than their one. The relay is smaller than their one in most of the dimensions. The most important is fit. Also, the SONOFF one is something which is not Wi-Fi- operated. Our one, the one which you see, the Gen 4, is Wi-Fi, Bluetooth, ZigBee, and everything with power management and everything built in the relay with much more functionality in much smaller form factor. There is a benchmark for the mini relays. We compare three products, but not only by the features. As you've seen, with the Gen 4, we're supporting also Wi-Fi 6 on the top of everything, the most widely using technology for connectivity right now in the customer homes.
When we walk about the features, you can see how rich of the features is our device compared with others. It's not only this one. We're also comparing the [PM] series with our competitors, and from what you can see, there are lots of brands there. The only one which is comparable to our size is Bosch, which is, by the way, maybe three, four times expensive than us. Still, for us, this is the dummy relay which needs a controller, which needs a hub, which cannot decide, which cannot take a decision by itself. I mean, it cannot be programmed at us, our devices, with everything which we build in. This is the simple comparison between us and almost every other similar relay on the market. As you've seen, there are cheaper devices, not so much, a single one.
We're in the middle of the price range. At the same time, if you compare the features which we're providing, compared with everything, everyone else, we are far away from our competition. We're still working to make these differences a lot, lots of differences to add some more features and to go far ahead from our competitors also in the next months, years. Now back to Wolfgang.
Yeah.
With financial details.
Yeah, just one more remark to the pricing and the price comparison. If you go two years back, you saw, and you can check in the old presentations, we always had a pyramid saying that our prices are twice as high as the prices of cheap Chinese competitors like SONOFF. Now you see that this gap is shrinking. SONOFF is coming closer. They increased the prices a couple of times.
We are relatively stable. We have increased the Gen 4 a little bit. Gen 3 will be in the future our fighter model. Today, we still have Gen 2 in the markets. This gap is shrinking and not increasing. The gap to the top guys is increasing as well. We have always been half the price of Bosch. Now it is like two and a half, three times of other big competitors. That shows that our price positioning is not deteriorating. It is getting more aggressive. As Dimitar said, we are fighting for keeping that. Whatever will happen in the future with Chinese competitors, even if they are more aggressive and they come back to the old position, we will, in worst case, if you want, we will be as we have been two years ago and where we started conquering the market.
We are very well positioned and still we are making good results. Coming back to the boring numbers compared to our nice products, you have seen this chart, so I do not want to repeat everything. All the numbers are going in the right direction. If we go into the regions, you see that we have different developments in the regions. In all regions, we are growing. In all regions, we are growing above the market. The DACH region grew only, if you want, 19%. Now, as I said, it is complicated to say how was the market in DACH? Was it growing by 10%? I would doubt that because with all the economic situation that we see in Germany, especially, I think we are more than twice as fast as the market.
Especially in the DACH region, we have one small issue with a very famous online distributor, without putting any names here, that is trying to force us into something that we do not like. We could make much more revenue in DACH than we currently do because we are not saying yes to everything that distributors are asking. Especially with consequences on price visibility, price wars that we want to avoid, we are on an excellent way here. You see that we are more than able to compensate what we might lose in one channel that is not as it could be. We could do much more if we want. If needed, if we want to accelerate, we can accelerate. We are planning more in the midterm and in the long future.
As well for the future, rest of Europe grew 41%, mainly driven by Italy and Nordics. I told you in the last meetings that Italy is our second biggest country. We see a similar momentum as happened in DACH just in this country. In Nordics, we see a very good development in the pro market. All this is quite promising for the future because the size of DACH, it's our biggest region, biggest country with Germany, but the others have to catch up and have to develop faster, and that's happening quite fast. Rest of the world still on a low level with 34% growth as well, quite promising. I have to say something here.
If you compare the numbers from last year to what we presented a year ago, there are some very small changes because we had to make some adaptations in distributed revenues, and we did this retroactive for the last year so that numbers are comparable, but on a very small level, nothing significant. That all looks quite good. If we look to the regions, everywhere growing, everywhere growing above the market. If the market is 10%, 5%, or 20%, we do not exactly know. We will find out, but we feel very comfortable with this. We are working, as you know, on our cash position, on the cash flow. From operations, we have gained EUR 4.1 million more than one year ago. It is quite promising. We have reduced our stock. We have, on the other hand, increased our prepayments to suppliers, to Chinese suppliers, and to chip manufacturers.
There are a lot of products in the pipeline that will come, and we hope that we can balance that out over the year. We had a VAT return, and we have more incoming money from customers. Of course, we made more revenue last year. The other things are small adaptations. The important thing here is we have increased our equity ratio to 86.2%. That is an impressive number. We are really in a very healthy state, and our balance sheet is very healthy. Once again, if we need more cash, we have the possibility to take part of the bank line that we have secured now, up to EUR 20 million. We are financially on a very safe side. That is just a very small update. We are continuing working on working capital improvement and margin measures.
As you know, we have implemented a procurement department at the beginning of the year that starts to pay back in a lot of small steps. It will still take more time to have significant improvements here. This will minimum take nine to maybe 12 months or even a little bit more. Constantly, we see already now that this pays back, and it was the right decision to do so. Some details, I will not go into all the numbers, but as you know, and as we already presented in the middle of February, we have changed some distributor contracts and with this as well, some accounting rules. We have allocated some bonuses and marketing funds in a different way.
The effect is one effect on the gross profit that goes a little bit down because more of this money is now booked against the gross profit and less against the sales and marketing costs, especially marketing costs. That is why you see that on the marketing cost side, we are even a little bit below last year. This is coming partially from this effect, and it is coming as well partially from one big trade show, less in Q1 2025. Last year, we had a Light + Building, very big, one of our three big trade shows. This year, this did not happen. It is only every second year. That is the second effect. On the other hand, it has as well an effect on the revenue.
If we would have booked everything like- for- like as a year ago, our revenue growth would even be 3% higher, round about 3%-4%. We feel more comfortable booking it this way, and that does not change at all all the other numbers that we have planned for this year and for next year. Premium app, here we have an increase from Q1 2024 of 134%. We see that still on a low level. If you compare this with 20% of customers are willing to move, that would be completely different numbers that we might see in the coming years. We are still very careful pushing this too much. 134% more is very promising. We have changed our accounting to an accounting that is typical for software as a service in this regard. That is why you do not see the financial effect yet.
Most of our customers are choosing the annual payment, EUR 35, and not the monthly payment. The annual payment, we are now changing to book it not when the money comes, but we distribute this over 12 months. The effect will come back during this year and especially in 2025 and 2026. If this continues growing in this speed, we are quite confident that we make a good move and a good step in recurring revenues, and that's one of our strategic targets for the future. Dimitar talked already about the roadmap. I don't want to talk too much about products, but this chart I showed you in the call middle of February. We plan to grow 25% in Q1. We actually grew 29%. We plan to grow 30%, 40%, and 50% in the coming quarters. We will keep that number.
We do not say that, oh, now with 5% or 4% more growth, we increase the numbers for the full year or for the next quarters. We feel comfortable having a small buffer if something surprising happens, if some products are delayed or the economic situation deteriorates more. We feel quite comfortable still with all these developments. With the products coming, we see that we can confirm this plan for the future. Dimitar said already that the new generation of products has a slightly higher margin than the old ones. That as well helps, of course. With some of the products that arrived in Q2 already, typically in very small quantities, we will have bigger quantities in Q3 and Q4. That explains this ramp-up of the revenue curve. We are already with the summary.
Revenue is over target and over the internal plan with 29% versus 25%. All regions are growing, and we are growing especially outside of DACH. That shows that our products work in other regions of Europe and not only in our old core region. The Q1 EBIT with 25.2% is above our target for the Q and as well above our midterm ambition. You know that in Q3 last year and in Q4 last year, we were a little bit below the 25%. We are perfectly back on track. Cash level improved, and we have secured a bank line on top of this. The regional expansion will continue. We have just announced one or two weeks ago that we have opened our Polish subsidiary. The colleagues are here to have the onboarding week. We have a full team on board there.
This as well will take some time to show first results, but we are quite optimistic that we have a very good and very professional team with Adam on the top, with a huge experience in that market. We are continuing to grow in the professional market, but we are as well adding channels in the do-it-yourself market. We do not want to lose our strong basis in the do-it-yourself market, but it looks very promising as well. All the feedback that we get from Intersolar and others is that this strategy to grow in the professional market pays back as well. We will have a wider product range, and we will have change of products, not adding up to 200 products at the end. We will keep this level of a bit more than 100 number of app subscribers above target.
All this is promising, and we confirm our guidance for 2025, EUR 145 million-EUR 155 million, and for 2026 as well, EUR 200 million or above. We have started measures for working capital improvement, and the first effects are visible. We expect that this continues over the year, but we will not sacrifice revenue for having low stock or optimizing this too much. We are very careful. The real effects will come in nine to 12 or 15 months. I already said that new product categories will support our growth, and there might be one or two surprises during the year if Dimitar's team continues to deliver as they did in the past. That is all. If you want to subscribe to our newsletter, here is the QR code. If you did not yet, I think most of you are.
To download the presentation, scan here or go to our Investor Relation website or to the Airtime website. With this, we are open for your questions. Thank you very much.
Yes, thank you very much for your presentation and the numbers. We will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask your questions in person via the audio line. To do so, click on the raise- your- hand button. If you do not have the possibility to speak freely, please place your question in our chat box, and we will read them out. As we have many participants, please delete your questions from the chat box if it is answered in terms of content. I will wait if there is someone on the line for the audio question.
Otherwise, we just received a few questions in our chat box. We'll start with the first one. Yes, congratulations for a successful and impressive quarter. The question is, on the Shelly Installer Finder, there are fewer installers in the U.K. compared to countries such as France, which do not have any localized teams. Can you speak to how the expansion into the U.K. is proceeding, especially with professional installers?
Yeah. In the U.K., we currently have only one salesperson. We are looking for the country manager. We had a lot of interviews, but we did not find the right profile now. If we do not have the right profile, we will not start hiring more people because we expect the new country manager to build his team around himself. Nevertheless, we have two very good distributors.
We are present on trade shows, and we see that step by step, we are more visible not only in the do-it-yourself market as well as in the professional market. This is a little bit delayed to what we internally planned. On the other hand, we had the opportunity with Poland. It is always a mix of where do you want to be and where do you find the right people. To the Installer Finder, yes, we have less in the U.K. and we have more in France. We have already a French localized website for two years that, of course, pays back. Both of the countries, we did not actively promote our Installer Finder. We just promoted it in the DACH region, German-speaking region, and in Nordics, where we offer trainings, localized trainings as well. We had a couple of trainings in English language.
This is more or less by coincidence. At the beginning, I mentioned that we have a long waiting line. We have a lot of installers waiting for training in Italy, in other regions. During this year, this is what I meant with phase two of the installer program, we will localize that and will offer trainings in England, in the U.K., in France, in Spain, in Italy, and in other regions of Europe, and in Poland, of course, and in other regions of Europe. That will come. Currently, whatever we have outside of DACH and Nordics is just happening because people subscribe. It is nothing that we have planned with. We are overwhelmed with the long waiting line and the high interest in other regions.
Thank you.
The follow-up on what you already said in the presentation is how big is the percentage of do-it-yourself versus professional in this quarter?
Yeah. Oh, wow. We did not check this number. I would guess it is still 70/30 because it is really complicated to get a hard number. We cannot just go to accounting or controlling and see what did we charge to, what did we charge to or invoice to do-it-yourself retailers or online retailers because there is a blurred market.
Can I add something? Which is important. Okay. By number of devices, it is definitely 70/30, maybe even more for the do-it-yourself. But when we talk about the revenue, this is quite different. It is 50/ 50, probably what I expect without looking directly at the numbers. I will tell you why.
Because all of these solar PV manufacturers, battery manufacturers, all of them, they start ordering from us the most expensive devices. This is the Shelly 3Ms, any kind of the energy meters, which is compared with the do-it-yourself relay. They're five, sometimes ten times more expensive. This is the difference. By number of the installations and number of devices, it's still do-it-yourself, but the revenue is maybe almost equal between the professional devices for professional installation and installed through the partners and professional compared with the do-it-yourself. That's it. Yeah.
As I said, it's complicated to say. We had a visit from a big do-it-yourself retailer here.
They told us that their estimation as well is it's a bit more than 30% pro because in a do-it-yourself store, the professionals, especially the smaller ones, they go there in the morning, buy the devices that they need for the day. That is why I said it's blurred. It's not very clear by channel because some of the people buy this in Hornbach, OBI, or Bauhaus stores, or Leroy Merlin. Some buy this on an online channel. It is really complicated to say. We get some numbers from estimations from those channels. We get some numbers from asking our customers. It's definitely growing, the pro share, and Dimitar is right with all the feedback and as well numbers that we got from the installers of solar panels that here we talk in hundreds and thousands of units that they buy and not in individual units.
That is revenue-wise because the devices are more expensive as well. That is a clear change, yes. We make this calculation every couple of months. We are not following this every month, but we can put this in the next presentation as a quarterly feedback as well.
Thank you very much. We have from two participants questions concerning the premium app. What is currently the churn on the premium app? Can you roughly elaborate on the ratio between annual and monthly subscriptions?
Yeah, I can tell. With premium, whatever it is, it is going very well. You know that we do not push the clients at all to switch to the premium because this is such a feature and such a, how to say, and also competitors.
It's not like competitors, but our other companies like Amazon, Google, they don't offer premium subscription to control your smart home. Of course, we offer much more sophisticated and good features in the application. Okay, first, if there are customers, most of them make an annual subscription, not monthly subscription, which is good for us. 80%. Yeah, about 80%, they choose an annual subscription, which is good for us. The churn rate in this case is not so big, and I cannot take the right numbers because for most of them, the annual subscription is still not, we started this one in September last year, August, September, something in this period. Still the first year is not over. If I'm looking at the monthly subscription, the churn rate is significantly, significantly smaller.
The numbers are significantly smaller compared with the customers which continue paying their monthly subscription.
Yeah, so low single digit.
Yeah, yeah, absolutely. Low single digit is a churn rate, which means everything is going in the right direction. We do not want to be a.
We just lost the connection and the video stream. Maybe they will go to fix that in a second. Please hold on. They try to fix the connection because we lost it. I cannot hear them as well. They just try to reconnect. Meanwhile, we just hold on to this channel. I apologize for this inconvenience, but we lost the connection to the Shelly Group by now. I will wait for some more seconds or maybe minutes that they reconnect and we can see Dimitar Dimitrov and Mr. Kirsch. They tried to dial in for another time.
Please hold on to the line and please apologize for this inconvenience. Hopefully the connection to airtime still is online so you can hear me in the audience. I just got the note that they still try to reconnect. Please hold on to this line. Again, we apologize for this inconvenience concerning the rejoining of Shelly Group to this call. It seems that there is a severe problem because I cannot hear them clearly as they still try to reconnect to the call. Please hold on for a few seconds, hopefully not minutes, that we can restart this and follow up on this call. It seems that this is not an issue that they can solve in this moment.
I'll wait a few seconds and, well, I'll suggest that because we have some more questions in the chat, please feel free to contact investor relations directly with your questions. Well then, so we have Dimitar Dimitrov back on the line. Perfect, guys. I'll just.
Hello?
Yes, perfect.
Maybe we can mute ourselves. Okay, the setup has stopped working. Can we just take one PC to continue?
Yes. Perfect. To get onto this. I will just follow off with the question and read them out for you. Congrats to be back again and congrats for the strong quarter. Can you give us a bit more color on the expected margins for Shelly Smart Lock in 2025 and how they compare to the rest of the portfolio?
Yeah, it looks like similar as the other products.
We will not have, maybe they are a single-digit percentage lower, but have a very much higher revenue because of the high value of the products. Currently, we are keeping the selling prices, reducing them even a little bit because we see the first effects from bigger quantities and as well our other economies, like better chip prices, to bring the cost price a little bit down. We expect the margin to be similar to the margin of our other products.
Thank you. There is a question concerning the update on a new factory in Bulgaria. When you will announce and give us more information that you are building a new factory in Bulgaria?
I can do it right now. It is too early, by the way, and we do not want to raise the expectations.
The new factory in Bulgaria, first, we make a first production from the United States in Bulgaria, a test production this month, which is good. Now we start to make in big quantities here in Bulgaria, especially for the United States. This could happen at the end of June, beginning of July. We'll start the real mass production. About the factory, we already rented the space. We're preparing the space. By the way, we're expecting machines to be delivered at the end of the year. Let's say September, October, machines to be delivered, which means the factory will be live beginning of next year. January, February, we'll start working. Then we can have a much deeper update. We can have a tour, a video tour, and everything about the factory. Usually the delivery time is about six months for such machines.
For that, we expect to be there at the end of the year.
Thanks. Another question from one of the participants. Would you be able to share a bit more about how things are progressing with Shelly X? How many products do you expect to present over the course of the year?
Okay, Shelly X and the products. I will take this one. Currently, there are four or five products on the market. Still about 15 is ongoing products. We expect to be released in Q2, beginning and also during Q3. It is very dynamic because every day, more and more companies start asking, looking for the Shelly X. It takes time.
Probably to end of the year, we expect at least to have at least 20-30 products will be powered by Shelly products, which will be available through our website and also through our distributors and also by the manufacturers of these appliances. Yeah, it's just an ongoing process. We've seen a really huge interest, especially for the bulk producers, for the white manufacturers, but not only. Very soon, I don't want to share some additional details because this is confidential. Very soon, you'll see some of the much bigger appliances than Shelly devices, which are using our connectivity technology.
Thank you very much. Yeah, that's a pretty good question. For how many years do you think you can continue to expand above 30% a year?
Next 10 years, what about? 10 years. 10, 20, I don't know. Maybe some years will be more.
No, do I have a serious answer? We are still a small player in that market. The smart home, smart building market is big, and we are growing nice. We are ahead of competition technology-wise. We expect to grow faster than the market. That is something we said on our capital market data. The market is expected to grow 10%-15%. We historically outperformed the market three or four times. We think that this will go down to two or three times. There are enough regions where we just start. There are enough product categories where we are not in. We have so many projects that are just starting and that will pay back in 2026, 2027, 2028. Until 2030, we think we will continue growing above the market. Currently, the market in our biggest region is a bit suffering.
It's not that positive. Again, I don't really know how big it is. Is it only growing 5% or 10%? We think that 2x-3x the market growth is what we expect over the next four, five, six, seven years, 10 years. There is no real limit. We are not a couple of billion EUR or USD market.
My question is, how many years do we continue? We want to continue only with 30% of the office.
A related question maybe or a statement. Can you expand on this question? Although momentum eased somewhat due to ongoing macroeconomic headwinds.
Say it again.
Yeah.
Although momentum eased somewhat, what is about the ongoing macroeconomic headwinds?
I mean, we usually say bad markets are Shelly markets because if the market is bad, negative, if people and users and as well companies try to keep their money together, but they need to invest in energy management systems. They need to invest in home automation or building automation, office automation. They try to find solutions that are reliable and cheaper than the very high-end products on the market. Today, we showed price comparisons compared to some of the big players in the market. We have half the price or below half the price. Interesting enough that some of the big players are contacting us in some cases because what they want to do for big projects is they want to be visible in the central breaker box. Someone opens the big doors and sees a very famous brand.
Where it is not that visible, they themselves try to start to offer Shelly devices because it reduces the total cost for the whole project. That is something that is helping us. Technology-wise, we are well advanced. We are way better than a do-it-yourself brand or a Chinese brand. We are seen as a very reliable professional brand now more and more. This will increase with the next generations of products even more. We are in a very good situation. Especially if the markets are a bit under pressure and people do not say, "Come on, I do not care if the relay costs EUR 100 or EUR 50 or EUR 30. It is only, I do not know, 50 relays that I need." That starts to sum up to a big amount. That is good for us. That helps us.
On the other side, at the beginning of the presentation, I said we are seen as the standard in solar industry. That as well helps. If the standard is half the price of very big international known brands, I do not want to say names, but that is something that is super positive for us and creates more pressure on the bigger brands than on us.
Thank you very much. We have a question. I said it directly to Mr. Kirsch. Can you give us details about sales in different countries in South America?
No.
That is a short one and a good one. Let us move on.
Of course, I could, but it has a good reason that we are reporting in regions.
Because if I once start telling you how much revenue are we doing in Chile, in Brazil, this question will come every time. If one country is -5% instead of +10%, another question comes. We have a clear reporting. We stick to that, and we cannot disclose numbers beyond that. We are growing in South America in total. We are there on a small level as it is part of the rest of the world. It is not breathtaking. We see some demands. We see especially some professional demand coming as well. We have one corporation with a very well-known switch manufacturer that is very strong in South America that can open some doors for the future. That is all promising, but it is also not one of our core markets and key markets. We grow there.
We take what we get, and for the time being, that's fine.
Fine. Thanks for the statement. We have another participant. He just begins his question or his statement with addressing the elephant in the room, U.S. tariffs. I know it's low share of revenue, but what is your assessment of the growth opportunity in this environment? You last mentioned in conversation during BSE Investor Day, you haven't been yet charged any tariffs so far. Has this changed? Assuming current lower 30% tariffs on China, say, what is your competitive position?
Can I say this? With which tariffs we talk about? The tariffs a month ago, a week ago, two hours ago, or two hours after? That's completely irrelevant. We have enough stock at the moment in the United States to continue selling. Let's say to waiting what will happen finally with the tariffs.
We don't care about this one. We have opportunity anyhow. We're moving the U.S. production in Bulgaria. It's far away, not only about the tariffs. I see the general political situation is in our favor on one side because the Americans and also the Europeans start being much more careful about the data protection and who can exactly control the PV system, measuring their houses, who can switch on and off. For me, it's a very interesting situation than when the Spain and Portugal in this part of Europe, they have a huge power outage because something happens with the solar system. Don't forget that the current situation that 90% of the solar systems is reporting to the, for example, the Asian clouds, let's see like that. And for them, it's very easy to operate and to switch something on and off if they want to do that.
This is coming to be a concern in the future, which means everything related to the in that direction also must be related that maybe in the future, the people will understand that it's most important to pay a little bit more, but to have a solution from the company, which is a transport company, European-based and something, than the tariffs and how much they will pay or not to pay anything. Currently, at the moment, the situation about the tariff is completely unreliable. Nobody knows what exactly we'll pay in what time and something, and we just need to work a movie a little.
Besides unreliable, we are quite happy that the elephant in this room is not so big because the room is small.
Yeah.
Because in this case, the United States is not one of our core markets.
Whatever happens there with tariffs, plus 100%, plus zero, plus 300%, has, first of all, on our business, a very limited influence. Dimitar already said we have enough stock in the U.S. to live for a while. We have adapted our prices already before the tariffs came, and we see no negative impact on our revenue. Now, if tariffs come, and let's say the tariffs are 100% on smart home products, every smart home product is coming as well. The big U.S. companies are coming from China. They have to pay 50%, sorry, 100% import tax tariff on a $100 product, as we have to pay that on a $20 product. The gap between the price points will increase and not shrink. If there is an effect, it can even have a positive effect on us. Regardless, for us, it's not an issue.
It's nothing we talk about every day. It's nothing that keeps us awake at night because the effect is very limited. We still have the option to ship products from Europe because here is our main warehouse, and we do this anyhow. We have different tariffs. If we ship from here, then we ship from China. That's another option that we have. The elephant is shrinking.
Thank you for this strong and pretty clear statement. I'll take one last question. I'll read it out. Are you currently able to compete with Tuya using your Shelly X, or do you see a need to further develop your software support or hardware in order to do so? We would appreciate it if you could elaborate further on this. A quick follow-up.
Looking ahead, what proportion of your revenue do you expect and could eventually come from Shelly X?
Okay, first, we don't want, we cannot, and we don't want to compete with Tuya because if you ask Tuya, every, if you see all Tuya devices and ask every consumer manufacturer, distributors, Tuya is directly related to the cheap Chinese sheet which somebody provides them the connectivity technology. This is the companies which are using the Tuya. Tuya gives their technology to everyone which want it. For example, a hundred bulk producers or maybe a 10,000 bulk producer manufacturers in China, and they give it the same technology to all of them. What happens on the end? They need to compete by pricing. In one moment, pricing is very low. Then the quality starts decreasing. This is the circle which is at the end.
There is no good for nobody. Also, as you know, the last few years, Tuya was losing $100 million-$150 million easily on annual basis, which is not, believe me, we do not want to compete them at all. We want to provide our technology first to a U.S. and European-based company, which is much more above the connectivity technology. Even that, if you are working with a Chinese one, we want to choose one, two, three bulk manufacturers and to offer only to them the technology. This manufacturer, we will prove as high-quality manufacturers. This is, let's say, there will be selective partners which are using our chips, and which, because we do not want to ruin the brand and do not want to ruin with somebody which is just playing the price game.
Finally, the customers say, "No, I have a huge respect for Tuya until we start testing the devices powered by Tuya." I have no idea how they work. I do not know how people like it because when they start working, we start, first idea is very easy. This device is Tuya. We can make it Shelly. The manufacturer already knows what he is doing. Let's just replace the module. We found that working and good working is a completely different way. Yeah, the device is working, but customers are completely not satisfied. We need to start with manufacturers to explain to them why they need to improve the quality, why they need to add some kind of features, why they need to, why these things are important, not just the simple things on and off, but they need to make it more.
Yeah, I think we will be, let's say, maybe in the future, we will be a driver for Tuya to improve also their own quality. Directly, at the moment, we don't see that we will be direct competitors for everybody. We will be much more important for the good brands which one is the technology. We've seen that this trend is increasing.
Thank you very much. As I said, that was the last question and your last answer for today. Thanks for joining. We come to the end of today's earnings call. Should any further questions arise at a later time, please feel free to contact Investor Relations. Thank you to you, gentlemen, for the presentation and the time you took for the answers. I wish you all a lovely remaining week.
With this, I hand over for some famous last words to you, Mr. Dimitrov.
Okay. I have to say everything is going well. Everybody asking us how it's going is going well. Lots of challenges. Everyday, daily challenges, challenges in the production because the quantity is quite much different. Challenges with the suppliers because they need to deliver and they have their own problems, we need to handle it. Until now, we're showing that we can handle this one in the right way. The company is going in a very good way. Yes, everything which we're asking and we answer for, we can stay behind that we're going in that direction. The direction, maybe in time, we need to change it, but for good.
We do not show everything which we know, of course, because first, maybe we do not want to overestimate from your side where we are going. The second one, especially from the product side, we want to keep a little bit of the most important devices information hidden because we know that this call also means that there are competitors who could watch it, and there is information which will be shared and we do not want to. Thank you very much for your support. Thank you very much for your participation. Maybe Wolfgang?
Nothing to add. Thanks. See you in a few months.
Thank you. Bye-bye.
Bye-bye.