It's a day.
It is. It starts now.
Yeah.
Now, afterwards, I have to run around.
You got to keep everybody on time.
That's a challenge.
I'm getting my little come closer, walk closer, get your unit. Yeah. Most people are really cool, so.
I've got them in for you.
Can you help?
They come a little late.
All right. Good afternoon. The next Planet MicroCap presentation is Shelly Group. I want to introduce Wolfgang Kirsch.
Yes. Hello, everyone. I'm happy to be here and to talk about Shelly Group. We are a smart home company, very well known in Europe and in other parts of the world, not that much known in the U.S. We are at the very beginning, but it's a fancy story. We are making everything that is smart in your home and covering basically everything from energy management, your lighting systems, security, access control, garage, mainly in Europe, in photovoltaic systems, solar business, where with the energy that you produce there, you can optimize the energy consumption in your home and the utilization of the energy produced on your roof. How does this work? We have devices for different use cases. I show you one here. That's for retrofit. That's this small device. Most of the devices have this size.
The idea is you install this behind your wall switch or behind the socket, the power socket in your wall. With this, you make the existing wall switch smart. This device, at the same time, has power metering. It tells you how much energy is consumed at that point in your home. Like this, we have different solutions. The price of this device is $15 roundabout. It is very cheap, cheaper than to replace your wall switch. On top of this, you do not have to change the designs of your wall switch. You keep everything as it is. That is a bit more complicated in Europe than it is in the U.S. because you have these simple switches. In Europe, we have different colors, different designs, different brands. That makes life of people easier. We have plug-and-play devices.
That is a normal plug that you put in the socket, or that's a normal sensor for humidity and for water leakage or gas leakage or motion control or some other things, usually battery operated. We have as well devices for central installation. If you have a new construction, you would put everything in a central place. That is easier later for maintenance. The bigger market today, especially in Europe, is the retrofit. It's the renovations. Everything is controlled via our application or other applications. We have sold since 2018. That was the moment when the first Shelly device came to the market. We have sold more than 21 million devices. That's numbers from the end of last year, 31st of December. We are in roundabout 4 million households, and we have 1.85 million users of our application or our cloud solution.
One part of the Shelly system, and that's what a lot of our customers like, is the device works as well without connection to a cloud. It works without connecting to the Shelly Cloud. You can have your own cloud solution if you want. It is super flexible. It works with Home Assistant. It works with every other application that is out there. That is what a lot of our customers like. It works completely without internet connection if you want that. Of course, you lose the remote controlling of your home then. All this is something that is very interesting. We are not forcing customers into the usage of our application. If you see already 4 million households, but only a bit less than half of this is using our application, we are perfectly fine if someone says, "I want to use a different application.
I'm happy with Alexa," or whatever. One strength of Shelly is the community. We use the community for a lot of things. Here we talk about product development. We are in constant contact with people that are, and most of them are geeks, of course. This business grows into the normal people's daily life, but today it's still dominated by geeks. One of the founders of Shelly Group, that's Dimitar Dimitrov, a Bulgarian guy. He's every day in his Facebook groups, in the communities, talks to the people, gets input, asks them about new product ideas. That's how a new product is created in our company. From day one, we know that the community likes it, that we will sell the first quantities, that they will talk positive about that because we included them in the development.
We include them as well in the process of final quality control. If the product is ready, we have the first 100 pieces coming from the factory. We send them out to part of our community. That is people that apply to be part of our external quality management. They get one of the devices. They test this device in their home, in their house with concrete walls or wooden walls with different Wi-Fi systems. We get very fast and very qualified feedback. Most of these guys are engineers working for companies doing this as their hobby. They are not paid. They are just rewarded with having the product very early. They get a voucher of EUR 50 for our online shop, and that is it. They are super happy and super reliable.
We could never test our devices in that much different environments than using this way of doing that. That makes our whole development process very fast. I had a discussion with one of the big players in the market, one of the huge guys. They said, "When Shelly has a product idea, the product is on the market 6, latest 12 months later." When they have a product idea 6 to 12 months later, they might have a PowerPoint ready to talk in a team of people about the idea. Maybe this is a good idea to have a product. We are already on the market. One last point that is important with this community is that we can, as a specialist and a member of the community, you can write codes for the Shellys.
There are thousands of different code scripts out there for Shelly devices. We are even offering Shelly with our Shelly Academy offering JavaScript in courses, especially for Shelly devices. So people write scripts. They like this. The device can do something that we did not even imagine. And they publish this script so that other users can use the script as well. Some of them we include in our application so that you can easily, in the inclusion process, say that this device should be directly connected to weather service, for example, to switch on your garden pump for the garden irrigation only if the weather forecast says it will not rain. That is things that we did not imagine that the community did. That led to a very fast development. Once again, 2018 was the first device coming to the market. 2017 was the development.
2018, the first device on the market. We are now publishing generation four. We have shown the first products at CES this year. They are already on the market. This chart comes from a Capital Markets Day. It was end of last year where we still said devices Gen 4 will be dead 2025, 2026. Half of the products are already there in the new generation four. Generation four is what we call multi-protocol. You buy the device in a store at Amazon or wherever. You bring them home, and then you can use them with Wi-Fi, with Bluetooth, with Matter. That is one of the new standards. With Zigbee, that is one of the most distributed standards in the world. At home, you find out what is the standard that I want to use, and this device works. You do not have to bother very early in the process.
What system do I use? And does this match to what I have? It simply works. That is one of the big advantages. If you see the number of features that we have built in and communications that we have built in, we increase the gap to competition. There is no one in the market that has that much features as we have. I usually say that we are outcompeting our competition by 10 times feature-wise, and we are increasing that gap. On top of this, we have compared to the big players in the market, we have half the price or one-third of their price. We are a bit more expensive than the cheap Chinese guys, but that is worth it because our devices are much better than the top guys and the low-end guys.
Just one thing to mention here, LoRa is a new device that is an add-on to one of these small Shellys. They are usually communicating in your Wi-Fi network at home with an add-on, a LoRa that you click on here. The device communicates about 5 km long between two Shellys. That is a system that enables access to agricultural use cases, industrial use cases, city automation, or even if you have a huge garden at home and it is a bit too far for your Wi-Fi, you click two devices on. Very cheap, below EUR 20, $20. That is new things that came up in the last year. Some key financials. Last year, we ended with roundabout EUR 107 million revenue, so a bit more than $120 million. $26 million EBIT. That is an EBIT margin of 24.2%. We are usually aiming for 25% EBIT margin, EBIT, not EBITDA.
That's important because most companies here talk about EBITDA. We prefer to talk about EBIT. We have a net profit that is only a little bit below because we are headquartered in Bulgaria. We only pay 10% corporate tax. $23 million is the net profit margin. We have an 81% equity ratio. We are not depending on banks or on bank loans, cash ratio of four times. The story of growth rates are constantly going in this direction. We grow 40-50% year over year. The same with revenue, the same with EBIT. I love these kind of charts that only go in one direction. I hate, of course, the red point here. That is the cash. We have enough cash to pay for our business to continue growing.
In the last year, we have a huge investment in working capital because we work with bigger distributors. They demand longer payment terms. We have changes in the generations, generation two, generation three, generation four. We needed a little bit more stock, but we have projects on the way to optimize the working capital as well, but that is not a critical thing. We just published our Q1 numbers. They are preliminary. Q1, we ended up with EUR 26.5 million, which is a growth rate of a little bit below 30%. Beginning of the year, we said in the first quarter, we expect a growth of only 25%. We expect this to continue growing, so accelerating over the year. We want to have an average growth rate this year of 42%. Why only 25 in the first quarter?
We have some of the new products, generation four that I just talked about, that just were published or shown to the public at CES. They were not available. We had some delays in the production in China, and that caused a little bit late arrival of products. We have new product categories arriving in Q2, Q3, and Q4 that will accelerate the growth so that we will continue to grow with 40% plus, 40-50% in that range. The regional split, we are mainly in Europe, and the main region is the DACH region. That is Germany, Austria, and Switzerland, where last year we realized 47% of our revenue. That is decreasing a little bit, the revenue share, although it continues growing quite significantly. Rest of Europe is catching up, and rest of the world is still very small.
The United States is part of the rest of the world. We see a better growth rate and development on a very small level in Asia currently than in the United States as well. That means that all these ups and downs with tariffs from China to the U.S. is not concerning us that much. Even if it would be, most of the products are produced in China as well from competition. If the tariffs are 100%, prices will double for everyone. That means that the gap between our products and competition products in dollars is increasing. It would maybe even be an advantage than a disadvantage. In the midterm, until 2026, we gave out a 2026 guidance already two years ago. This was to build trust in a small company.
In the midterm, after EUR 107 million revenue last year, in the midterm 2026, we expect EUR 200 million-plus revenue. We keep that guidance, although the growth rate is going down. Some investors that know us for a longer time always ask the same question, "When will you increase that?" We will wait. Let's see what this year brings. We feel quite comfortable with the EUR 200 million. As well with the EBIT margin of 25%, that means EUR 50 million. We talk euros here. That would mean about $220 million currently and a bit more than $55 million on the EBIT side. We plan to continue growing. How will we do that? First of all, we are in a positive market. The market is expected to grow 10-15% year over year. We have tailwind that helps.
We have as well started to establish teams, local teams in all the countries. We have a team in DACH that is proven to work. DACH is our strongest region. We are establishing currently teams in Poland, in Italy, in Spain, in the U.K. We expect that this will deliver on the sales and marketing side, more visibility and more partnering with local retailers and installers. That should boost the revenue. We have network effects. One of the network effects is we know that each of the 1.8 million cloud users on average adds 1.6-1.8 devices to his network. It is not one time I put everything in my house that I could. No, a normal customer starts with two devices, and then he adds, let's say, two devices every year.
That means to these 1.8 million users, we will sell 3.6 million devices this year. Of course, it helps if you have new devices. If you have upgrades of devices with more features, people replace it. We expect this number to be even a bit higher than it has been in the past. We are today a do-it-yourself first brand. We are doing 70% of our revenue with do-it-yourself customers and only 30% with installers. We know that the installer market, the professional market, is the bigger market. We are growing in the last years, every year 10 percentage points more in the professional market. We expect this to continue, and that is one of the sources of growth in combination with new product categories that we are, especially for those guys, but as well for other customers that we are establishing.
That should lead to more than EUR 200 million revenue in 2026. End of last year, we have shown this chart to investors in an investors day in Frankfurt. That shows that we have some ideas where to go after 2026 because we will not stop. We expect, and that's market numbers, the market continue to growing 10-15% every year. We have new initiatives. Of course, we continue with opening new branch offices in the different countries and everything that I explained already. We have implemented the first AI functionalities in our application.
The application tells you if your refrigerator is not working in a proper way, if it consumes too much energy, if it has a not typical energy consumption that sometimes only needs maintenance, it sometimes only needs a cleaning of the ventilation, if your light is switched on at a time where normally it's not switched on, and a couple of other things to come. This is a paid version of our application. We have the application in the market. We see some first results. We will make EUR 1.2 million roundabout revenue equals 100% profit in this year coming from the paid version of the application. We are very careful because we have seen in the market that a lot of competitors were failing with asking customers to pay for an application, and they have a shit storm immediately. We want to avoid that.
We do this step by step, very slow, but we see it constantly growing. Then it's purely mathematics. We already know how many customers have signed in now. We can make a simple calculation how much profit this will bring. We are basically a software company. It sounds like a hardware company, but our origin before 2018 was having software services for telecommunication companies, like the first SMS services, ringtone downloads. Some of you don't even know that this existed one day. This is our origin. We know how to operate software, and that is the differentiation between a Shelly and other devices. It's not the hardware. If you go to CES, you see hardware that looks like ours. Our hardware or our hardware with the help of the software can do much more than everything else in the market.
We are developing other services that are software services that customers will pay for in the future. That is like fleet management for hotels. If you operate one home, it's easy to use your application. If you want to operate a hotel with hundreds of rooms and want to control the whole hotel and individual rooms at the same time, that's a different story. That's something where companies pay for. Advanced energy management solutions. I already mentioned the solar systems, and we are in contact with energy providers that are really interested in using our cloud data because we have a lot of data in the cloud. We know for what people consume energy currently, how many EVs are charged, how many lights are switched on, how much energy is coming from solar systems, and how much is coming from the grid.
That is a lot of help for energy providers to balance as well their grid. We are in first contact there to use that. We have a very good way. That is the background of the software company to manage our cloud. We know that our cloud management per device is at 10% costs of a lot of competitors. That is something that is a huge advantage if you just estimate that this device lasts for 10 years, not more, because then usually a relay is broken depending on how much it is switched or it is outdated and replaced by a new one. Ten years, that is 12 times 10, 120 a month. If you have 10 cents per month, that is a lot of money already. It is more expensive than this one. If it is 1.2 cents, that is a completely different story.
Yeah, we have new markets that we are just starting. Like, we will have, most probably, cross fingers, cameras by the end of the year. We have made an acquisition of a smart lock company last year that we will have the first products in Q2 this year. We see that the interest is very high because the Shelly community is really happy to integrate a smart lock or a smart camera in their Shelly environment that they already have. We see that a lot of them are super happy to adapt these technologies. That is more or less a summary of what I just said. Why is Shelly a good investment? First of all, we are in a positive market. It is always good to have a market that is not going down, a market that is going up.
We are with our market at the edge of becoming a mass market. We are not yet there. It's still a market for the guys gambling around at the weekend, playing with their systems, trying to optimize the energy consumption. It's not yet mass market, but it's on the edge to become mass market. The market will grow in the next years. We have a brand that is well established. If you ask in Europe, especially in DACH, of course, but as well in South and North Europe, it starts. You ask people about Shelly, they know Shelly. The community knows us.
We see that whenever we have a certain level of this communication that happened first in Germany, then it happened in Austria and in Switzerland, now it happened in Italy, we really take off because the community starts to fuel itself and to generate more sales without adding huge amounts of marketing dollars to be visible. Technology-wise, I explained that we are 10 times better than competition. Sounds bold, but it would lead too far now. I have a product comparison chart that I'm happy to share in one-on-ones as well that show how much better we are technology-wise. Still, we are much cheaper than most of the others. We have as well room to increase the prices a little bit if we would need to. Right now, we do not want to because we think mass market is much better. We have the right scale.
This year, we will sell and produce 13-15 million devices. That's a huge number that will lead to our guidance of EUR 150 million roundabout revenue this year. Others sell half of the number of devices and make the same revenue because ours are half the price. The advantage is that we are starting to be a very interesting partner for all the big chip manufacturers. Like five years ago, we had problems to find the right chip sets. Now they are all queuing in Sofia in front of our offices. That's the big names that you would not even imagine that they travel once a month to Sofia to convince us to work with their devices. That's really, really cool. We have a lot of upside potential. Some of them of the ideas I mentioned. We have strong financials.
I mean, just 40-50% growth every year, 25% EBIT margin. I'm usually asked the question, why is the EBIT margin not going up? We think it will increase a little bit, but we are super careful with not having a too high EBIT margin. Today, I say if we make 30%, I would have made a mistake. 25% and higher revenue is much better, and getting the same dollars or euros out of a higher revenue is much better because it's a market game that we play right now. We have a very strong management, of course. What should I say if I'm standing here? ESG is an enabler for us. For a lot of companies, it's a burden. It's, oh, we have to deliver numbers.
For us, it's great because we see that a lot of companies found out that, oops, we have to report energy consumption on a very detailed level. Some of them found out that they can use Shelly devices to do that. One of them is Vodafone. They use one of our devices for energy management in their base stations, antenna stations in Africa. That is a step-by-step deal, and it proves that our products are really good. Otherwise, they would never have used it. Now we have, I think, one and a half minutes for questions. Oh, yeah, that would take another hour. We have a solution that is not looking like this anymore. That is basically the chip that is inside here that should be a competitor to Tuya. Some of you will have heard about Tuya.
Tuya is a chip manufacturer that enables home appliance devices to be smart, to become smart. There is more and more pressure and questions about Tuya because it's a Chinese company. Whatever they say, the data goes to China. Our device, our Shelly X, is at the very beginning. We have the first couple of thousands. We have the first small contracts. We are in contact with big players that they use our chip instead of a Tuya chip. We fulfill all the European legislation, of course, about data protection. That is one of the reasons why companies consider to change. That is a game changer for us. That is one of the future potentials. Some other questions? Yes. Yeah. We sell a small proportion direct to consumer with our webshop, below 10%. We sell on Amazon.
Of course, Amazon is the biggest channel for do-it-yourself smart home worldwide. There is no way around. We try to control Amazon not to become too big. We sell through wholesalers in countries that then sell to retailers, usually do-it-yourself retailers. We are in Germany with Hornbach, OBI, Bauhaus. In the U.S., we are today only on the webshop. We will hopefully become soon a local player for Home Depot as well. That is a typical channel, do-it-yourself. We sell to wholesalers that sell to the installers. That is a completely different direction of selling and partially different products. No more questions? We are perfect. Oh, there is one more. Can I have one more? That is another one-hour discussion. The market is different. U.S. customers would not prefer to put this behind their wall switch to change the whole wall switch.
That is easier in the US because you have this, sorry to say, this very basic, ugly design of the switches. In Europe, we have in every country different brands, different colors, combinations. It's not easy to change that. If you change one, you don't want to change everything in your home or apartment. That's an advantage. We are more and more bringing tailor-made products to the US market, and that will help to increase our market share. The other thing, we are not crazily investing in marketing and spending millions to be visible. We are at CES. We are now making the do-it-yourself first game. We are quite successful on Amazon. We are good and better and better on our own webshop. B2B is now step by step increasing. It's very slow.
On the other hand, the big advantage is if we would withdraw from the United States today, this would not change our 200 million target, and it would solve all the tariff problems in one minute. Thank you.
Told me. Where do I pick up one of them things? Where do I pick up one of them things?
One of these things.
Shellys.
Yeah, right.