Morning, ladies and gentlemen, and a warm welcome to today's earnings call of the Shelly Group SE, following the publication of the unaudited half-year figures of 2025 and giving a business update. I'm delighted to welcome the Co-CEOs, Dimitar Dimitrov and Wolfgang Kirsch, who will speak in a moment and guide us through the presentation and the results. After the presentation, we will move on to a Q&A session in which you will be allowed to place your question to the management. Let's jump straight into the figures. Mr. Kirsch, the stage is yours.
Yes, good morning, everybody, and Welcome to the first half earnings call 2025. Welcome as well on behalf of Dimitar Dimitrov, who's next to me. As usual, we will lead you through numbers. I will start with some general updates and some general numbers. Then Dimitar will talk about products, what will come, what happened, and some activation things that are really interesting. I will lead you through the detailed financials and some previews for the end of this year. Just a reminder for the newcomers, we are a smart home company or a smart business company. We are making your home smart. We are making companies smart. We are making solar businesses smart. We help to save energy. That's what we are doing, and that's a thrilling business, and that is continuing to grow. Some highlights from the first half of the year. We grew our installed base.
We have now 2.3 million or more than 2.3 million users of our cloud. We increased that number by 800,000 in the last 12 months. We are in more than 4.9 million households. That's always a bit of an estimation because we cannot measure exactly the households, but the cloud users. We grew that by around about 1.6 million in the last 12 months. The first Shelly was sold in 2018, and since 2018, we sold 2.6 million devices in total and 11.5 million in the last 12 months only. That's really amazing figures. That starts to be a really important customer base, and that starts as well to unlock our software as a service business. That opens doors for future businesses with monetizing the data that we have, monetizing the customer connections that we have.
That is something that we look more and more at, and that starts to be one of our key objectives. Some other highlights. The financials. Revenue is above target in the first half of the year. EBIT is on target in the first half of the year. The growth in all regions is above the market. Always a bit complicated to say how strong the market grew. We estimate something between 10% and 15%. In some regions, it might even be below the 10%. As I said, always complicated to get some numbers, but that's the best estimates that we have. In distribution, we once again onboarded new distributors, new distribution channels in DIY as well as in the professional business. About the professional business, a very important and something we are really proud of is our installer network that is growing.
You might know that we started that a bit more than a year ago, and end of 2024, we had 900 installers onboarded. End of June this year, we are on more than 2,400, sorry. I can tell you that in the next quarters, we will be able to report higher numbers because currently it's growing very fast. That shows that our products are more and more appreciated in the professional segment as well. That's something that we were working hard on, and that starts to pay back now. Customer ownership, that's about the numbers that I showed you before. Besides having more addressable customers that use our application, and of course, a strong increase in the premium app, Dimitar will talk about the number of activations in the cloud of devices in our cloud. That's something that gives a promising outlook for the next six months as well.
Last time, for the first time, we talked about verticals. You know that we are already quite strong and seen as a platform in the solar business. Beside this, we are talking with other potential verticals. One is motors. That is really the source. That's the guys that build the motors for garage doors, not the garage doors. It is one level before, or the motors for shading systems. We are in good progress. We have a couple of very good contacts. Everyone is happy about the progress of work. It will take some time, but that's on an excellent way. With the insurances, I have to say that will take longer because they have very long decision cycles. That's still a very early stage. Everyone says that is amazing what we could do, how the insurance could save money, how the user of the insurance could save money.
Let's talk about that. It takes a long time. On the security systems, we are for a longer time already in the certification process with the big American security companies. This is for most of them, this is already finished. In the last couple of weeks and months, we got a very good visibility about our Z-Wave long-range products in the U.S. We are in a lot of magazines, specialized magazines. Since then, we have a higher attention from all those guys. We are in test processes. We hope that this will pay back as well in the next year. Something that is new is energy contracts, electricity contracts. Using our database, we are in very good contact with energy providers and with energy platforms. Of course, we will do this in the DACH region first, where we have the highest density of customer data.
With this information, we can really tailor-make, offer, and sell electricity contracts to customers because we know how much they consume, we know what they consume it for, and when exactly during the day they consume it for. We can make some tailor-made offers. First test will start end of this year, beginning of next year, but looks very promising, and everyone is happy about the data that we can provide in this regard. A couple of days or weeks ago, we published that we have made the first co-branded deal with one of our big partners in the solar business. EcoFlow is a company based in California and in China. They bought and will continue buying two of our devices, the Pro 3EM and our Shelly Plug, and will bundle this worldwide in all their regions with their solar systems to have a better energy management system.
That is something that we expect to come from other partners as well. That is the next step if you want in the vertical of solar business. Now about the numbers. All numbers show in the right direction. In the first quarter, we grew our revenue 29.3%, so round about 30%. The EBIT only grew 12.6%, but it's in the frame on the level of the expectations for a quarter that is not one of the strongest quarters. We were hit by some currency exchange issues coming from the weak dollar. We lost EUR 1.6 million on that. If we would make a currency adjustment with the dollar euro exchange rate, our EBIT margin in the first half of the year would be on 25.4%, so even above the expectations. Where is this coming from?
This comes from our very early payments or pre-payments of orders that we have still done with a higher dollar. Now that the dollar is lower when the products arrive, we have to reevaluate the products and the pre-payments, and that leads to these EUR 1.6 million. We do not expect that this continues in the second half of the year, but we have some positive counter effects in the second half of the year. I will come back to this later. The last number is something that we are specifically proud of. You know that we worked a lot in the last months on cash improvement and on free cash flow improvement. We have made a very good jump in cash, mainly coming from free cash flow from operations. You will see more details in the second part of my presentation. All numbers are going in the right directions.
There is no weak spot. We are quite confident. We are happy about the first half of the year, and we look positive in the second. I pass to Dimitar to talk a bit about products before I come back with information about more detailed numbers.
Thank you, Ladies and Gentlemen. Welcome to everybody. Let's talk about the products and show what we do and what we're planning for the second half of the year. As you can see, for the first half of the year, we already released more than 30, yeah, 32 products, which is a night in its product updates because we are strongly working on the Generation 4, the latest generation of the whole Shelly devices. Also, we released 30 new products completely new on the market, which did not exist before, which support our growth. This is not everything because the big portion is coming now. We keep a huge, a new, a really amazing new products and new releases for IFA because we want to present them at this huge event. This is our, how to say, our home event.
In Germany, even it's a worldwide event where we want to present the latest technology, the products, which we talk about it with them for them before. Really, it's a game changer for some of the smart home directions. Something which is also important that you can see that how the generation and the new products are coming into the market. From 2022, the most selling and most used product is the Generation 1. Then we slowly start penetrating on the market for the Generation 2 of our devices. 2024, we're on Generation 3. Now that this year, we can see that the Generation 4 is coming on top. How this helps us because every new generation adds something else. It's adding the new protocols which can be used, not only the new devices, but especially the new integrations which can be done with our devices.
Now, just imagine that if Generation 1 supports just the Wi-Fi, Generation 2 supports just the Wi-Fi and Bluetooth, Generation 3 supports not only Wi-Fi and Bluetooth, but different kinds of the add-ons and the LoRa and other things. Now, out of the box, the Generation 4 supports Wi-Fi, Bluetooth, Zigbee technology. On the top of that, we have 4G and LoRa add-ons to each of our devices, which, by the way, make our devices compatible with almost everything and any home automation worldwide. Something else which is very important. Besides the sales, we are also looking at how it's going with the cloud activations because like that, we want to be sure that we not just fulfill the warehouses of our distributors and wholesalers, but also we want to see that they're selling the devices and how the activation is going.
What happens is that you can see even that our growth is below 50%. Clearly, we can see that we keep above 50% the daily activation rate for the new customers. This is the new devices, the new customers which install devices on a daily basis. Also, you can see that the average number compared with the 7,500 now is above how many? It's 11,000 average daily activation. This is the new devices on the existing and new households. This is a very important number which we're monitoring, and we know that from where we know that the, how to say, the Shelly is keep growing, and we have a much more penetration on the market. What happens is that something which also we show in the previous call. Now in the Q3, we're ready, and on the IFA, this is partially what we show.
Very shortly, this is the first Shelly Power Strip, the very amazing presence sensor with the positioning of the people and the multi-person positioning, counting, and targeting. Something which we never show until now, but the code name is the XL display, the new multimedia point of the central control display for the house. The ultrasonic sensor, something which is a very long time, is the customers asking us because they want to measure the different kinds of the liquid levels or presence, but with ultrasonic detection. Some others which want to keep them hidden because we never present it, and we prepare the huge event in IFA where we show it. For the Q4, we're still on target and still working for the new Pro series, the Generation 4, which we're targeting to be VDE certified, completely VDE certified.
The camera one, which we talk about, the new camera is in progress and working on that. The bulbs and different kinds of the additional devices which we're working on, which I don't want to share now because this will take a lot of the time. Yeah. Now I want to go back to the Wolfgang with the financial advice. Thank you, Wolfgang.
Thank you. Yeah. You see that most of the products at least are coming that we promised before, and that gives us some tailwind for the second half of the year. Just to remind you, as usual, there was the chart that I showed before. All numbers are going in the right direction. Revenue growing, EBIT growing, with the small effect in currency, the EBIT would even be above our targets and way above the targets for this quarter, above the target for the year. Our cash is increasing and coming from a better management of working capital. If we go into the quarters, you see that first quarter we were growing around about 29%. Second quarter, the same speed. For the second quarter, we planned a growth rate of 30%. We landed at 29.6%. That's almost on the point.
In the first half of the year, if we take the two quarters accumulated, we plan to grow 52.8%, and we are, or to reach 52.8%, we are on 54%, so a little bit above. Just a side note, something that is completely normal for us, but it's not normal for other companies. We have now 30 quarters in a row of growth. This is something that is really amazing. Of course, we plan to continue this record. Let's see if we reach 60% or above without any fallback in revenue. We are at least working on that. On the EBIT side, both quarters growing in EBIT. Second quarter, if we take the EBIT with this side effect that was higher in Q2 than it was in Q1 of the currency exchange rate issue because more products were coming in that we already prepaid before at a lower price.
If we take the adjusted EBIT margins, it's 26.9% for the first quarter, and it's 24% in the second quarter. We confirmed the annual target of 25%, so we are on a perfect way towards that. We think, especially with higher revenues that we plan for the second quarter that we already announced at the beginning of the year, and we have less currency effects, and we have positive currency effects coming from lower cost of goods that will support a strong EBIT margin in the second half of the year. The regional split, the DACH region, our biggest region growing above 20%. You know that the region is at least was at the beginning of the year not in a very good shape in general. The economic situation was a little bit stressed. It looks better now. It looks that the economy in Germany is coming back.
All signs are more positive, but the first half of the year is over. We grew 20%. That is, from our point of view, significantly above the market. At least 2x the market, maybe 3x the market. The DACH share of revenue now is a little bit below 50%. That's as well- planned because, of course, with all the efforts we are doing in other regions, they have to catch up. The rest of Europe grew 31%, almost 32%. Share now is 45.6%. This is mainly supported by Italy and the Nordics, where we have on a good level already, especially in Italy, a very nice growth rate, so very high growth rates. The U.K. is performing over proportionately, but still on a low level. We are still not having our team on board, the full team on board in the U.K. We have one person.
We see that this brings some effects, but we want to invest more. We just have a problem to find the right people there. The rest of the world, a huge jump, 83.7%. That's a huge increase, mainly coming from Asia and a bit from Australia. The United States is as well growing in the same speed as the group. I have to say that we still are on a low level here, and we still see this opportunistic. This is not our key focus. Our key focus is in Europe. That's where we want to continue growing and whatever we can take from the rest of the world. If it continues like that, of course, we are more than happy. That's nothing that is really plannable and that we think we should focus on. Now the cash flow bridge or the cash bridge.
If you look to the number of cash flow from operations, we increased that, and that is the main message here. We increased that versus last year by EUR 6.2 million. That is an amazing achievement. That is the first result from all the small measures that we are taking, and we are definitely not at the end with that. We are just at the beginning to optimize our working capital level and to really work on all the details that will take a longer time. That's a very good achievement. We invested around about EUR 2.1 million in R&D, EUR 1.9 million more than last year total investments. The rest of the numbers are more or less on a normal level. If you ask yourself why the FX rate here is only EUR 300,000 instead of the EUR 1.6 million that I mentioned before, that's the cash effect.
The other effect is not a cash effect that's coming from the cash effect. That's why this is mentioned here in the cash bridge in the cash flow overview. All very nice. We are still on an equity ratio of 81%. That is amazing. I don't think that there are that much companies out there with those numbers. Just an update on this chart. We have working capital measures on the way for the last six, nine months. The measures itself did not change. We made some progress in most of them. As I said before, we are definitely not where we want to be. We see some first good results, and we see that it will take some time. I would say one to one and a half years to really reach a very good level in all these points.
One example, more shipments using sea freight, that would reduce our cost of goods by 1%, maybe even 2%, or increase the margin on that level. We are not able to do that because we have still hiccups with production, with chip availability. It's a bit last minute. The certifications take longer time. We did not make big movements there. That's a reserve of 1% or 2% that we will have in maybe one and a half years and not earlier. We tried some things already, but it's not that easy. On a good way, but still takes some time. We are not in an overhurry because we do not want to risk revenues just optimizing the stock. What we have achieved now, we are super happy, and that will continue. That's some more detailed numbers from the P&L. I don't want to go in all the lines.
Just two, three things. I already mentioned the EBIT margin effect or the EBIT effect with the adjusted EBIT. There is something similar that we could do. I'm not a big fan of adjustments. That always needs too much explanations. Just the 1.6 are significant and coming from FX that I cannot change. There is another EUR 1.6 million that is coming from revenue effects. If you remember, we have changed contracts with our distributors in the last year, end of last year for the last quarter. That leads to a different accounting of bonuses, and that leads to an effect that is visible in EBIT, and sorry, in revenue and in the gross margin. If we would take this effect out, make an adjustment for that, so really look at a like-for-like or comparable comparison, our growth rate would not be 29.3%. It would be 33.1% growth.
Now we have these changes, so we have to report the 29.3%, but if we would make everything comparable, it's 33.1% growth. Higher marketing costs, sales and marketing costs, mainly coming from quite high investments in third-party marketing spends. For example, our U.K. distributor went to two trade shows already with a very big presence of Shelly, making us visible in the U.K. market. That's not paying back immediately. We were on some trade shows in Italy and in other regions of Europe and of the world, did something in Asia. That is now an investment in the future and will hopefully balance a little bit out, but it's not something that is really significant, but it's quite a high investment.
The premium app, you see that the premium app in the first half of the year in comparison with the first half of the year last year, 2024, grew by 145%. That's a really huge jump. I repeat myself, we are doing this in a very careful way because there are not a lot of good examples in the market with successful paid versions of smart home applications. It's really easy to get a shitstorm here from customers, and we are not in a hurry, but we see that this takes off. Why is then the revenue only growing 79%? That has two reasons. One reason is that all our customers have a free trial period of three months. This will come to the 149% or a lot of the new customers will start paying in three months.
The second reason is that a lot of our customers decided to pay once a year, not every month. In the last year, we booked this in the month when they paid. Now, this year, we do this in the way as it correctly should be done. We make deferred bookings. The effect in the revenue and in the EBIT is visible, not when the customer pays, but distributed over the 12 months that follow. That's an effect that is delayed and that will grow over time, but we feel very comfortable with reaching the EUR 1 million revenue. As you know, most of this is 100% profit in this year and to continue growing in the planned speed in the next year. That's very positive, and that's one of the first things where we can monetize money and come to recurring revenue models. Dimitar showed this pipeline already.
I will not go into details, just to repeat that this supports, of course, our higher revenue growth for Q3 and Q4. Beginning of the year, we already said that Q4 we expect 40%, sorry, Q3 40%, Q4 50%. On top of this, we opened our Polish office in May this year. There are not big effects visible now, but we expect some effects in the second half of the year. We are planning to open in Q3 offices with sales teams in the U.K. and in Benelux, and hopefully until the end of the year as well in Iberia, so that we have more people on the ground because we see that this really pays back. We have a couple of challenges, and we have more opportunities. Challenges are more short- term. We have some shortages of key components.
One example, there is a U.S. company delivering a chip that is like EUR 0.60 or EUR 0.70, so not significant, but we need it for power metering. They decided at the beginning of the year, of course, without asking us, to reduce their production capacity because of all these ups and downs with tariffs and the things that Mr. Trump is doing. Now we are suffering because we wanted to increase our delivery or our orders from them. This is not possible, so we will get not the number of power metering components that we need. That mainly reflects on revenue of one key product that is used from the solar industry mainly. We could easily sell 100,000 pieces more. The average price of this product is EUR 50 to distributors, roundabout. You can make your mathematics. That's revenue that we will not make this year and that we will compensate with something else.
The negative exchange rates that we had at the beginning of the year, no one really knows where the dollar goes. We try to secure as much as we can, but we prepay our devices three, sometimes six months ahead, and we don't know where the dollar stands, but we do not expect that this continues in the second half of the year, but that's a challenge. We have a more and more complicated certification process that delays products because being present in Asia, being present in Australia, in the United States, in Canada, in Europe, having Meta certifications, Meta certification is a real headache for us because they are so slow. That delays the processes. That's not something that is really super positive, but we have to live with that, and it increases, of course, the costs. We have a challenge with one key customer.
I mentioned that in the first quarter already, that did not change. That's not that small distributor worldwide active that some of you might know, headquartered in Seattle, starts with a big A. We could easily push revenues by opening the doors and saying yes to everything that they want, but they are hungry like a lion. They ask more and more and more and more, and we stopped to say yes to everything. We are in a real dispute. First half of the year, the revenue with these guys reduced enormously. As you have seen, our revenue grew 30%, so we are compensating all of that or most of that with other channels that are super happy that our product is not that strong on this channel anymore. That is something that we will see where this leads, and it's nothing that we can change, or we could change.
We could boost our revenue short- term, but long- term, midterm, we would have a negative effect. Regional expansion, I already said we need the key people that we still do not find everywhere, but we feel that we are on a good way. On the opportunity side, midterm, something in the second half of the year already, we improve our sourcing and we negotiate better with chip manufacturers and others, and we see first results that will have a positive effect on the gross margin. The exchange rate issue that is on the one-hand side causing these exchange rate problems will, in the second half of the year, pay back with lower costs of goods because having 10% lower dollar means we have a huge opportunity here in decreasing the COGS and with this increasing our gross margin that supports the 25% EBIT goal.
We are having the new product categories in the pipeline that Dimitar already mentioned, like cameras and a couple of other things that will support the growth in the next year. They are on the horizon. With all the issues we have with this one customer, we have already an improved channel management, and we have clear plans and steps how we will further improve that next year. That opens a wider range of distributors, and that reduces as well a cluster risk that we have with being strong with a couple of customers only. That's not good. Experience shows that local people increase the revenue. It always takes, it has a delay. It always takes a bit.
We have seen that in Nordics, putting the team on the ground at the beginning, growth rates were average of the company or a little bit above, and now it looks like it's really accelerating, and that's all positive signs. Short- term, some challenges. Midterm, we have more opportunities than challenges, and that's a good sign. That leads to the summary. We are happy with H1. Revenue is above target. EBIT is on target. Once again, if we would make this adjustment even above target or significantly above target, all regions are growing above the market. We have a significant free cash flow improvement, and that's something that we are really proud. All regions continue to grow above the market. We have some good progress in being stronger in the professional market, seeing that more installers come to our platform.
We have a delay in some of the products, some coming from the chip shortage or from other component shortages or from some certifications. We have a much higher daily activation rate. That was the chart that Dimitar showed. Just to make the numbers clear, once again, 50% higher daily activation, 30% more revenue in the first quarter. That's a clear sign that products are sold, that the pipelines are not overfilled, and that gives some positive wind for the second half of the year. Premium app above target. With this, we confirm the 25% and the 26% guidance. Some people say we have to increase. We will not. We keep both guidances as they are for the time being. We have measures to optimize the working capital that will continue and will pay back in the next 12-18 months. New product categories support the growth in 25% and 26%.
We have additional product categories that are not yet published that will come soon, hopefully, and that will support especially the development in the professional business. That is something that currently no one has in Europe, and especially if not on our price point. There are some individual products, but this will be really mind-blowing. That's all. Now open for your questions.
Thank you very much for the presentation, and we will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask questions in person via the audio line. To do so, click on the "Raise Your Hand" button. If you have dialed in by phone, please use the key combination star nine followed by star six. If you do not have the possibility to speak freely, please place your question in the chat box.
We have a first participant with a question on the audio line. Bastian Brach , you should be able to speak now.
Thank you and good morning. Two questions for me. In the last few years, you onboarded several country teams, sales, and also local management. You said you rather see a gradual improvement in, for example, growth rates, and I expect also margins and not only an immediate effect. Just for better understanding, could you explain the important steps the local teams are doing after being onboarded? Is it mostly on the partner side where they are expanding faster than before, or is it also marketing which plays an important role? Could you give us some explanation or indication how that plan is going after you launched several local teams?
Yes, of course. First, let me explain what local teams mean or local people mean. We started a couple of years ago with having the German office. There we have a full team for our biggest region. It's now more than 10 people, and they do all the local stuff, local training and local language, local marketing, cooperations with magazines, with journalists, with influencers. That really shows that we can keep the growth rates quite high, although we are on a big level. In other countries, we started to onboard one salesperson, like in Italy or in the U.K. In some regions, it failed, so we had to take out the people or change the people. In Nordics, we were quite early with first one person, and then we added three more, one for marketing, technical support, and as well for sales.
The next step is, and that's what we did in Poland. In Poland, we hired a full team from day one. We found a country manager with very good experience who brought people from his network. There we have, and that is a typical setup. We need the country manager. Then we need one more salesperson. We expect the country manager, of course, to make a lot of sales as well. In such a small team, we need someone for marketing to localize all the marketing materials in the local language. Polish language is important, especially if we want to go more into the mass market and into the professional market because the professional installers, only a few of them speak good enough English, and they don't want to talk English if it's about technical stuff.
The engineers and the early adopters and the geeks in the market, they speak English, and they are open to do so. If you want to have mass market, you need local people. The same is for technical descriptions. Marketing materials, technical descriptions, installer trainings in the local language. Of course, and that's what happened with the Polish team. They came a couple of weeks after they onboarded with a long list of distributors. Where should we present? How should we do our business? A lot of these guys, we simply don't know if we sit here in Sofia and think about the Polish market. They have much more knowledge about our market. The same will happen in the Netherlands and in the U.K. In the U.K., we have a good distributor. We have a good salesperson, but we need a full team.
We need someone for marketing, handling the cooperations. In Germany, we are every day in the newspapers. We are in computer build, in build, not only computer build, as the best plug in the market currently. They make a huge campaign for testing products, and we are in this category. We are one of the leading brands. That is something where you need local people because as well the journalists don't want to talk English. That's a fact. That is a step-by-step approach. Now we have two people in Italy. We are looking for one or two more. We had to change, unfortunately, one person in South Europe as well. That's what people typically do. They're onboarded. We build a small team, technical support, marketing, sales.
That's where it starts with because the backbone, of course, will stay here in Sofia, and like accounting and all the other things will be done here.
From a margin perspective, is it like someone, or not one of cost, but ramp up cost because, of course, local teams with their salaries and maybe some marketing to ramp the efforts up and then gradual improvement over, I don't know, one year, one and a half years?
Of course, Bastian, this is an investment. We do not expect that we hire four or five people. I think we have five people in Poland. Five people invest something in marketing, and the payback comes the next day. We are not very patient in that. We are not known as a company that invests millions in marketing and in teams and countries, and then we wait five years to have the payback. They all know that. We are not starting at zero. We are known in Poland. We did, I don't know, EUR 1 million roundabout in Poland last year. With the Polish team on board for six months this year, we expect this to grow, and next year and the year after to grow this significantly because the market volume is huge.
We had a discussion with our U.K. distributor, and they said that there is no reason why they should not do the revenue that we do in Germany, not in 2026, but in 2027, 2028, 2029. We need to make big jumps, and for this, we need as well the teams that can support that.
Thank you. On the second question, I've noticed the log two and log three device, which was on your last slide in Q1, disappeared from the slide. I think that was intentional. Could you talk a little bit about if you plan to launch it in 2026 or what happened there?
Thank you. There are so many things, the unlimited space, and we cannot put everything. The works is on track. We've seen that maybe they will be released very close to the end of the year, end of 2025. Probably from what we know and how we're doing, the first batch, when it's coming, it's not the huge one because we want to first be completely proof from the wide range of the customers, which is, for example, 1,000 or 5,000 pieces. This will not change our numbers significantly. The significant number change is expected after that, which definitely is 2026. It's removed just to add something else. It's still there. It's still on track.
It depends on the, you know, it's so many things, certification, or some additional requirements for the chip supplier, some returning information, feedback from the QA group and external small group of external customers will give us. This could make a delay between three to six months, for example, just to make the product perfect for the other customers. It's there. It's just, I don't know, it's just removed from the presentation.
Bastian, you pay a lot of attention to details. That's amazing. We had already a small delay with the current lock because we wanted to sell 4,000 pieces in the last quarter. We did only get 2,500. They will come later. We see that the supply chain takes longer. It's a mechanical product, mechanical production that takes longer. At the same time, we will show at IFA the current lock in a version with only two seconds opening and closing time. Currently, it makes, as a lot of the smart locks, it makes a lot of noise, like opening, like zzzzzz, and now it will be open, close in two seconds. At the same time, as Dimitar said, we need to find some, we need to get the right certification. The indication currently is that we will get very small quantities this year and significant quantities next year.
That's why we have not enough space on the chart to put 30 products. That's why we took them off. It's not something that will be a dead or life question.
Yeah, no, it's something. Just imagine that there's at least 10 products which we hide and don't share with nobody because of the competition, because we want to keep them as not as a reserve from the investors, but it's something which we cannot show everything. This is a lot of direction which we're working for.
Okay. Thank you. The locked one still is sold by you, and you are still producing them, right?
Yeah, sure. Same producer, just we improved the quality. We changed the display because that was a weak point that was breaking with the old lock that was sold by the company that went in bankruptcy. We have improved the technology a lot. We have integrated it in the Shelly environment. Now we have the new motor that is much faster and much more silent. The current ones that are there are already more silent because the isolation is better. The next locks that will come, one will be a smaller version of the one that we currently have, and one will be a completely new development. If we are lucky, we will have some revenues this year. If they are too late and shipment takes long, you cannot fly them. They are too heavy. That's all things that we still have to learn.
Okay, that's it for me. Thank you very much.
Thank you. We switch to some questions from the chat box. I'll read it out. Tobias [Zinding] is asking, "The growth in cloud users is impressive. You have earlier spoken about results from your cloud user survey. Results were up to 20%. Users said they would consider buying premium subscription. How do you think about long-term premium penetration rates?"
That's a very good question. You know, learning shows that if you ask customers, "Are you willing to pay for a service?" they all say yes. If it comes to paying for the service, they change their minds. We are not saying that in the next two years we will get 20% of our customers converted into premium customers. That would be too bold. I repeat myself, if you see the chart, we expect EUR 1 million revenue this year coming from premium application users, EUR 2.5 million next year.
What comes after is a bit far away, but I think we should double more or less every year. That leads to significant numbers in 2027, 2028, and beyond. Not only significant numbers, as well to a significant effect in results because that is to a huge proportion profit EBIT directly.
Thank you. Mr. Zinding is adding, "The guidance for H2 is very aggressive given the current results from H1. Can you maybe remind us on the different critical levers to reach the EBIT target beyond higher margin, new gen products, and the onboarded country team in Poland?
I think I can answer this. I t's a combination. It's not just one. The first thing is the new markets which you're opening, especially the Poland team. Yep, partially. The team in the United Kingdom which we are developing now, definitely partially. The new technologies, the new product lines which we're working on. Not as we say the works or the cameras, especially the very famous products for the even for existing customers as a power strip and the radar technology, the multi-person tracking technology which we develop and will be launching now. I've still seen the big part of the products is coming the second half of the year which you have for the revenue. There is no single stream. There is no single answer for the revenue is coming from there. Usually, we know that the second half of the year is stronger.
Also, by the way, from a distribution perspective, there is also the logic because during the second half of the year when it's stronger and the new products are coming, and also the Black Friday events, the special events around the Christmas, people are buying lots of devices upfront, which is somehow announced to the distributors buying the lots of devices upfront, which is somehow affects the second and the first half of the year. For example, we've seen lots of activations in the January and February in our cloud, but this does not mean sales because sales is made two months before. This is somehow related that the second half of the year, the new products, the market is much more active. You know, for example, the new winter season is coming. The people start looking again for how to optimize the energy consumption.
Usually, during this time, the energy price is much higher, which is the reason to make more. The second one is, as you've seen, what means 50% activation, 30% more sales. This means that really our distributors' warehouse is slowly going to be not empty, but let's say less with less products, and they will compensate this one on the second half of the year. There's explanation, and this is something which we've seen for the many, many years and quarters ago that happens the same.
Yep. Nothing to add. Besides that, we planned this from the beginning of the year. If you look to the February presentation for last year, we already said we expect an upramping growth rate, so higher percentages quarter -over- quarter, coming mainly from new products and coming from onboarding of countries or the result of people that have been onboarded before already. We see a very good development in Italy, for example, and we will see the first results in Poland. We will see the real effect in Poland next year.
There's a follow-up on the consumer behavior. Do you see any higher likelihood for consumers to buy cloud premium if they purchase newer generation products or certain product lines?
I didn't check it. I don't know if Dimitar checked this.
No, I don't. Let's say for the premium customers, as we thought many times, this is not our main target. We're offering them better deals. We're improving the services which we offer to the premium customers, but this currently still is not our main target. About the new products in Generation 4 products, it's too early to say because I will tell you, for example, for Generation 4, with this Matter, Zigbee, and everything certification, we have, for example, a significant delay for Shelly 2PM Gen4 . It's ready for production in the end of March. From the end of March to the beginning of the, I think, end of June, we're waiting to be certified because this is the first product, the Matter product, which has dual profiles.
Meaning this can act as a two-way relay with a power measurement or a cover control, the roller shutter control. This does not exist. We need to fight. We need to talk. We need to discuss how this can be done. They need to change their own procedure. All of these times, this product is ready in our warehouse, just ready to be, yeah, distributed through our channels, but they're waiting for this to be solved. Sometimes to be much more advanced, innovative, and going much faster than the market and the thinking for the other certification organization people, this might have a headache for us because, again, some delays. That's a lot of the difference which we do, a lot of the things which we do.
Clearly, we cannot say this or that because it's affected not only just for the we have everything on stock and everybody can buy us as he wants. Sometimes it happens that they buy what we have, not what we know, what they want.
Thanks. Can you elaborate on what you think about how the partnership with EcoFlow is going and your reasoning around the two chosen products?
Say it again. I really missed the question.
Yeah, it is a question.
Can you elaborate on how you think about how the partnership with EcoFlow is going and your reasoning around the two chosen products?
Yeah. Very well. The reasoning is very simple. One product is the entry product that they use for balcony power stations, and the second product is the high-end product that they use for bigger systems. The relationship goes very well. They are very happy with us. We are working on a lot of joint marketing activities, and we have a co-branded product. That's the first time we did that. As I said, we expect in the next months, quarters, others to come to ask for the same. Of course, that's always a question of quantities. We will not do this with everyone for small quantities, only if it makes really sense for us.
I want to add that you should not expect to share any kind of the details related to how much is the revenue from EcoFlow, what exactly we are doing. This completely, we are not allowed to share, and we will not do that.
Thank you. We move to participants on the audio line. [Mr. Hovwald], you should be able to speak now and place your question.
Thank you. Good morning. What is it that Amazon wants and you're not conceding, and what are the consequences that you're basically suffering?
Okay, to you or me?
I try to answer. I have to be a little bit careful because I'm not sure if Amazon is not listening in this call.
Oh, neither.
What are they doing? Amazon usually says that they take the price of a product as it is in the market. They don't want to be more aggressive. They don't want to be more expensive. Of course, they pick the ones in the market that they choose. If someone not relevant in the market makes a very aggressive price, they take this as their price. With this, this price is super visible in the market. Other retailers say, "Oh, Amazon is on that price. I have to go down in the price." Amazon says, if I run a promotion, I need to be cheaper than the others, and the supplier has to compensate that. No problem with that. We can do that because they sell significant quantities. You give them EUR 1 more for a product. You expect that they go EUR 1 down with the promotion price.
They go EUR 2 or EUR 3 down. Afterwards, they tell you the reason is they found someone who was more aggressive in the market. That's why they had to go down more, and they ask you for more compensations. We say, "No, we will not give you more compensations." This is a circle that is never ending. We had a conversation with the guys asking why they put one of our products at a super low price. They said, "We just matched the competition." I asked which competitor. They could not answer, or they didn't want to answer. One typical significant thing is one of our most sold products, that's the professional power meter that is sold in Germany by law without VAT if you use it together with a solar system. Amazon cannot show prices without VAT.
They match the price of competition that sells the product without VAT, and they include VAT, and they ask us for 19% compensation. I could continue now one hour more to talk about examples like this, and we are refusing. They start to be angry, and then they threaten you. They say, we will do this. We will return products. We say, "Okay, return products." We know that they sold more to end users than we sold to them. We know that they are completely sold out. They try to find products on the market. That's a nice power game, and we are not willing to say yes to everyone, to everything that Amazon wants, and paying a price in a sense of negative impacts on other channels later on.
Thank you.
Thank you very much for placing your question. I'll get back to the chat box, reading out a question from [Monsieur Tussaud] regarding your June 17 press release stating that Shelly Group is on track to register over 10 million new devices in 2025, assuming an average price of EUR 20 per device. Does this imply potential revenues of around EUR 200 million for the year? I assume that's not the case for 2025. I would like to know how should we interpret this projection in terms of revenue impact?
We did not release that we plan an average price of EUR 20. The average price is lower than EUR 20.
Yeah.
That's a quick answer to that.
I don't know. Maybe end user price is EUR 20, but it doesn't sell directly to end users. Over 90% is coming through the wholesalers, and they're buying in the different prices.
Yes. The big volumes are products that are sold at EUR 11, EUR 12, EUR 10. Now, if we plan 12 million- 13 million devices this year with a bit more than EUR 10, it leads to EUR 150 million. That's our simple mathematics.
Thank you. There's a participant on the audio line, Mr. Kondushev. You should be able to speak now. Mr. Kondushev, you should be able to speak now. We switch back to some questions from the chat box. Let me see. Yes. What is the revenue split and unit split between pro and do-it-yourself devices? Do the professional installers use mostly pro series, or do they use both?
Okay. I will not answer this question because this is a matter of internal information. We don't want to share this one with anybody because it can be used by competitors. Something I want to add because I've seen that there's some dots from the water, but Amazon, but this happens in this one. I just want to tell you there is no other company worldwide, even in Europe, which can completely kick out the biggest online retailer and stop selling to them and keep growing because nothing happens. Just nothing happens. This shows two things. First, we're not dependent on the channel. People don't buy us because we are present on Amazon or we're present in, I don't know, some retail chain in Germany. People are looking for devices to buy them from anywhere. They need our devices. They don't care who's selling these devices.
It's not the first time when some resellers try to push and tell us, "If it's not me, you cannot do the business." No, this is completely different. Also, this channel doesn't develop the market. We develop the market. People are asking, looking for our devices. This is some reason, for example, which we have with such kind of resellers. They tell us, "Okay, give me 50% or 20% additional for the marketing because we will promote our devices." How do we promote our devices? We very well know that if somebody is coming, no matter that could be Google, Amazon, they don't look for the smart relay for the curtains. They're looking for the Shelly one or they're looking for the Shelly 2PM exact device. Sorry, but to pay for this one to somebody else, just they're showing the numbers, not recommending, they're showing our devices. This is ridiculous.
This is really proven, and believe me, there is no brand which can, just for half of the year, I think mostly it happened in the second quarter, completely kick out one chain, one huge distributor, to stop, let's say, not kick out, but to limit the work as much as possible to someone, and then continue successfully growing as nothing happens. I think this is most important to look for, what happens and when. We know that we can live without them. They can live without us. I'm sure that not now, maybe in the future, we will make another big, huge collaboration, and then we can work together. At the same time, we're completely successful with the Amazon team for what, how it's called, this team for the connected environment. This is the, yeah.
Alexa team.
Yeah, Alexa team with the connected smart properties team. We, on a weekly basis, have a call with them. Lots of the hotels now in Europe, Amazon negotiating with them to implement their own technology using our devices, especially in Italy, the two big companies. I cannot share the details. The one, the big chain of the hotels using our device was not found by us. It's found by the Amazon team, the Alexa property team. Also, lots of the projects connect with the elderly living, which is driving from Amazon. They're working with us. This is a completely different direction in the businesses, but I think it's something which I just want to add to.
Yeah, I think that's to finally answer the question because this was about pro and not pro share. As Dimitar said, we are not disclosing individual product lines. If you ask if installers are installing more pro devices than other devices, I would say in general, no, because installers install what the customer wants. If it's installed behind a wall switch, that's not a pro device. If it's installed in the central distribution box, it's a pro device. I would say that most of our customers are able to install something behind a wall switch. Not all of them, and not that much of the do-it-yourself customers go to the central distribution box where they have three phases and where it's more dangerous. That means more of our pro devices are installed by an installer, but the other way around, the installer is as well installing the small devices everywhere.
We see that, I said it at the very beginning of the day today, the number of installers that are joining our network, it's rocketing, and it's accelerating every day.
Thank you. There's another question. What will be the revenue potential for the energy contract segment?
Too early to say.
Yeah.
It says revenue will be very low because it will be more a commission-based business, so it will have an EBIT effect. It's really too early to say. We could, of course, we have some internal calculation, but whatever we say here is leading to a wrong direction.
There is one question in detail. Can you clarify the problem with the Seattle-based e-commerce player? It sounded like they demanded a lot of products. Is it that you can't meet with a production to both their needs and other resellers?
I think we have answered it.
Yes, absolutely.
Okay. We move on. What kind of effects will the lower dollar have on the margins in the longer term?
If the dollar stays on that level, it will increase our margins because the components are depending on the dollar. If the dollar is 10% cheaper and we buy our products 10% cheaper, we bring them to Europe, convert this in euros because we make most of the revenue in euros, that will have a positive effect on the margin. In theory, if the dollar is 10% cheaper and we buy all products 10% cheaper, which is not the case because there are things that are not dollar affected, that would have a positive margin effect of 3%, 4%, or 5%. It will not be that much.
It's just like the theory: 10% exchange rate advantage or lower component price advantage leads to, with 50% gross margin, or 55% gross margin, leads to 3%, 4% better gross margin for us. It will have a positive effect in the mid and maybe long- term because, of course, we are securing now components at a lower price in case the dollar goes up again, that we are on the safe side to have these components on board and can take profit from this for a longer time.
Thank you. We move on to a question from our chat box. Could you give us any more color about the planned fabrication in Bulgaria, as Mr. Dimitrov said in an interview early on?
I can update with this one. Everything is going on track. Now, I think this year, this week or next week, we're finishing the tender to choose the supplier of the machinery, which we need for the wine. The building is under preparation. It's going okay. I think I just approved the air conditioner system, which needs to be installed. It's going okay. We're expecting the first Q of the next year, the wine to be ready. We don't expect immediately this wine to start generating revenue and to have a significant effect. It's taking time. We'll take additional maybe one or two quarters before we move some production. We increase the production capacity. As we know, as a company, we're not making risky moves, and we make everything much careful. Even sometimes it's against the revenue and the results, we prefer the safety way.
Thank you. Is there any expectance to open to new customer groups, for example, not technical consumers with a new Matter possibility? Are there already percentages how many Shelly consumers are using the Matter standard?
Very low numbers. Let's say the Matter standard is used not only for us. This is the market feedback. Matter is suffering, and the customer still doesn't use it because the limitation is not so easy to, as they advertise, to use the devices the first time. The second, a huge problem is that Matter now is the version 1.4. 1.45 means some version like that. Still, the big companies like Google, Apple, and Amazon, their controllers, the Matter hub, they support 1.1, I think 1.2, some of them, only one or two support 1.2 . I mean, this is going far from, they're following, but very slow, the new protocol upgrades for Matter. The limitation of the customers, what they can do with devices, especially for energy management, for example, they cannot do anything. They can just monitor the current energy, but nothing else.
With other teams, we've seen that the Matter hype is a little bit going away. We'll see what happens next year and how we support it. We'll decide when.
We decide for Generation 5 or 6 in the future, do we want to support it or will we keep the one which is only the Matter one for the customers, which is only one? If it is, this is deserved. For me, when we look, it's something below 5% of the customers which are activating the devices as Matter enabled. Some of them, we've seen that enabled and after that immediately disable it. They're still using our application and the native integration with Google, with SmartThings, with Home Assistant, with Alexa, but they don't want because, yeah, by the way, Matter doesn't give them nothing on top.
Matter will not, from our current point of view, be the big driver into the wide market of smart home. To reach this customer, this target group, I mean the not technical savvy people, that's why we are pushing the installer program because that's the guys that need installation, technical installation. We have installer portals now. We make it easier for the installers to access the customer's account. All this is something that is driving the market much more than Matter. Just a very simple comparison because I'm using, of course, the Shelly products at home with the Shelly application. To make it easier for others, my wife, I said, let's try to use Apple, Apple HomeKit. I can tell you it's very, very limited. It's easy to integrate, but you can switch on, you can switch off.
If you want to connect your light switch with a motion sensor, simply impossible. Doesn't work. If you want to have the information about energy consumption, doesn't work. That's very limited. I think that supports exactly what Dimitar just said. People try it out and then they switch back because it doesn't make any sense. It's a big marketing gag.
Thank you very much. In the meantime, we just received one last question in our chat box. Will there be a new TRV before the heating season?
No, the existing one is working well. The customers are very happy with the Bluetooth one which we're working on. We're thinking from the very beginning with the one, a really huge company to have again, to develop again the Wi-Fi version. The technology when we test is still a little bit to be aged. It's not enough proofed. We keep the existing one with the Bluetooth one. We've seen the really very positive feedback from the Bluetooth one, and we will keep it like that for the next season.
Great. That's everything with the questions. We just finished the last ones in our chat box, and there's no one with a question on the audio line. I'll wait a few seconds if there's someone using the chance to talk to you guys. It's not the case. Seems everything is clear. Thank you for joining. We come to the end of today's earnings call. Should further questions arise at a later time, please feel free to contact Investor Relations. Thank you to you both for the presentation and the time you took to answer the questions. I wish you all a lovely remaining Friday. For some final remarks, I hand over to Mr. Dimitrov.
Thank you very much. As I said before, I think at the moment we are on the speed growth, and the company is in very good shape and conditions. We believe that we can surprise the customers with our new lines and devices, also the investors with the results also in the future. Thank you one more time for the trust, and have a good day for everybody.