Welcome to the Q1 earnings call 2026 of Shelly Group SE. I would like to welcome the company CEO, Wolfgang Kirsch, co-CEO Dimitar Dimitrov, and CFO Iliyana Krushkova, who will guide you through the figures in a moment, followed by a Q&A session via chat. With that, I hand over to you, Mr. Kirsch.
Yes. Thank you very much, and a warm welcome from our side as well, to the trading update for Q1 2026 of Shelly Group. For the first time, we are three people in this call, so we hope that we can manage between the three of us. We have, as usual, Dimitar Dimitrov and myself, and now we have Iliyana Krushkova for the first time, as she joined us as CFO in January this year. We thought it's about time that you see her, and that she takes over the numbers or the big part of the numbers from my side, and hopefully she can as well answer all your questions afterwards much better than Dimitar and I did this in the past. I will start with the typical update or information about what Shelly is doing for the newcomers.
We are more and more with our products able to equip your whole home. The safety and security part, we are very strong in energy management, integration of solar systems of flexible energy tariffs, and of course, the core automation, that is roller shutters, that is lighting, that is all other devices, and more to come over time. Today's agenda, I will lead through some highlights from Q1, then Ilyana will present the financials, then Dimitar will, as usual, talk about products and a little bit about platform and give an outlook of what will come in the next couple of weeks. Then I will come back with some details about the guidance and some plans for financials and a couple of other information.
Highlights. Revenue and EBIT grew above our internal plan, we are positively not surprised, we are positive after Q1 because we expected a little bit more headwind. The gross margin made a very nice jump, that is really good because we have as well additional costs. Gross margin is over-supporting the cost development because, as you know, we have opened a couple of country subsidiaries. We are continuing to expand our do-it-yourself and Pro network through all countries, that leads to a strong Pro adaption. You will see later how many new Pro customers we have onboarded. We have opened in Q1 four subsidiaries or four full organizations in the U.K., in Iberia for Spain and Portugal, in France and in Italy.
That means the geographic expansion continues and is strengthening our local presence in European markets. Beside that, of course, we are still in the U.S. and we are in Asia with our Shenzhen office. Customer ownership is something that is more and more important for us. We grew our cloud user base. We have as well, we expect long-term monetization from this in a couple of areas. We talk later about that. Our premium app users are increasing as well. We are very careful with that. Talk a bit in detail about that later. With the Pro installer onboarding as well, this ecosystem is developing in a very nice way. End of Q1, we had 2.9 million cloud users. That is 40% more than 12 month ago.
The 6.2 million households is always an estimation because we cannot really know that number because that is a lot of Home Assistant users or other platform users. This is something that our customers like. That's not the weak point. That is something that drives really revenue because our customers love that they are not forced to use our application. Premium app users grew by 44%. We had 6,700 installers in our installer portal, and that is a very nice development. Even in Q1, we grew by 1,400 compared to the end of the year. That is really taking speed, and we are very confident that end of the year we will have a very big number standing here.
If you see the, some of the logos of new customers or customers that are already onboarded in Q1 or that are in the pipeline where we are in initial discussions, some of them, of course, we have showed you already last year, like OBI in Germany is onboarding now. We had some very first steps in the last year, but the real onboarding is happening now, and as well the rollout with a couple of the others. On the right-hand side, on the Pro channel, it's quite filled. In most of the regions we have a lot of discussions and very positive feedbacks from Pro distributors, so that's as well an important step, and that fits to development of the Pro installers at the same time. Having said that, I pass the word to Ilyana to talk about the strong financials.
Thank you very much, Wolfgang, and good morning, everyone. I'll start with the financial highlights for Q1. It was a very strong quarter for us financially. We recognized EUR 33.3 million of revenue, which was 26% year-on-year growth. It was mostly driven by the continued demand in all across the core markets. It was, at the same time, coupled with very strong growth in our underlying operating performance, as shown by EBIT here, which was EUR 8.6 million for the quarter. Another strong quarter in terms of growth, 30% year-on-year.
This was the effect of a very nice expansion in the gross profit margin, which was offsetting the increased spend in sales and marketing and the international expansion in general. In terms of cash, our cash position improved to EUR 19.8 million at the end of Q1, which was a 19% year-on-year increase, and at the same time, it was 44% better than our ending cash at the end of 2025, which is also a notable improvement. Going over the cash flow bridge itself, you will note that our most substantial contributor was our operating cash flow of EUR 8 million for Q1, which was actually double the amount of operating cash flow that we had in Q1, 2025. It was the effect of stable collections.
We managed to collect EUR 33.8 million from clients, which was EUR half a million more than our new billings for the same quarter. Also, collections were 46% better than collections in Q1 2025. Overall, in terms of collection, it was a pretty stable quarter. In Q1 as well, we also acquired the equipment for our new production facility in Bulgaria, and also continued to invest in innovation and R&D. All of this investment spend was entirely financed by operating cash flow, and you will note that our financing outflows were mostly limited to the ongoing lease payment that we have. Our overdraft utilization remained unchanged.
In summary, we managed to add EUR 6 million of new cash to our balance sheet in Q1 2026. It was as a result of our strong operating cash flow financing the entire investment outflows. We continue to maintain a positive net cash position at the end of Q1. In terms of our P&L performance, once again, revenue increased by 26% year-on-year, which was driven by the consistent demand across all markets. At the same time, gross profit increased in nominal terms by 43%.
This was especially strong performance, and it was mostly driven by favorable product mix for the sales in Q1, and to a much lesser extent by a certain reclassifications of MDF costs that were previously shown as goods of sales, but those were negligible for the impact on the gross profit margin. The gross profit margin, once again, it was more than sufficient to offset the intensified spend in sales and marketing, which was strongest in our core markets, most notably in DACH.
There was an increase in marketing and sales related to the international expansion that we had in the 4 new markets mentioned by Wolfgang Kirsch already, Iberia, the U.K., Italy, and France. It should be noted that our presence in the Netherlands and in Poland took place later in 2025, so it also has some impact on the QoQ performance here, both in terms of sales and marketing, and also on the G&A increase side. G&A increase, you will note that it increased by 37%, once again due to the additional headcount, the new teams that we have in the new locations, and also the new headcount that we added in HQ over the course of 2025.
As a result, once again, EBIT was strong by almost 26% margin, which is slightly better than our internal target of 25%. Net income also increased nicely by 34% year on year, reaching EUR 7.5 million for Q1. Once again, to summarize, it was a pretty strong first quarter for Shelly Group, and it laid some comfortable foundation to approach and to deliver on the annual guidance. I will now pass to Dimitar for some more exciting developments on platform and product.
Thank you, Iliyana. Hello, everybody. My part is just to present what is happening this quarter and what is upcoming. We continue. The people, our customers, continue growing their device in their houses. Compare with the year ago, the same customers install almost 20%-50% more device in their houses, which means that we have a sustainable growth also from existing customers. As you know, this is one of the main drivers also for the company because acquiring the customer is one thing, but also make this customer satisfied and to install more and more device in their houses.
This is something very positive feedback for us and for what we're doing and where we're developing the new trends and new devices. The key product pipeline. Already, as we talk the Plug M, this is first of the most, one of the most attractive device at the moment, which is selling very well.
I also publish in our Facebook page information that there is a special factory and production for this device to make it cost optimized and to making the huge quantity and to reach in the next months close to 1 million pieces production per month because we're expecting these demands to increase in the next months. This, by the way, is the one of the first product which is direct with direct competitor with the many others, the, let's say even the price point with some Asians manufacturers, but keeping all kind of the good and the features capable for the all the rest of the Shelly devices. In the price point, with the price point, by the way, is under EUR 10.
This is for us our door opener for the new customers, which will be easier for them without need any kind of electrical installation. The second one which we launch in this quarter is the famous presence sensors, which is one of which is really showing the going in the completely different generation of the motion sensor because they're taking not only that there is somebody in the room, but also detecting how many people is in the room, can measure the heart rate, the breathing of the people, can exactly say the positioning in the people in the room. Soon there will be for more update, we'll also allow these sensors to detect the fall detection.
This is the sensor which by the way is one of the sensor which is the mostly wanted and asking for the senior living companies and to provide them the service using the such a presence sensor with the positioning and the vital parameter reading. The Q2, as we say in the previous earnings call, we decide a little bit to postpone some of the products, especially for the cameras because driven by AI revolution also increasing significantly the price of the chips, and especially for the camera chips and memory. We already done, and from that I can tell in the end of this week, the first batch production for the cameras will begin, and we're expecting them they to be available on stock to end of the Q2 .
On top of that, we working on the completely new flood sensor which can detect any kind of the liquid, not just water or not just specialized liquid, but really everything in very small form factor. We are extensively working and soon we will be also start selling our next version of the lock, which is much more advanced and fast, which compared with the first one. By the way, also is coming the new version of the locks which extend the range and make them compatible to every kind of the locking mechanism of the European and U.S. doors. The breakers is also in production.
We expected them to be delivered in our warehouse beginning of June, so they will be available during June, which is completely new area which we prepared and we're expecting the huge growth in going in the completely new direction, the connected protection, not just not only automation of the households. I don't, does not want to go deeper because we'll take significant time for the second half of the year when we expand almost everything in our portfolio with the breakers, with the AI-equipped outdoors and indoor cameras, the different kind of the plugs and the power strips for the U.K., for U.S.
This is something which we will be expecting to drive our revenue and our profit and our future for the second half of the year. Of course, we cannot show everything because part of the product and part of the new lines which we planning for is we prefer to keep them hidden because the competition, but there is also some big things which also is coming, not only these products which we are showing here. About the long-term hardware and software development. From the hardware side, as you've seen, we working exactly on the range as we talked about, the smart locks, smart cameras.
We jumping with the smart cameras into monitoring and security, and the completely new batch of the sensors because now we rebuild and we make completely new motion, doors, humidity, and any kind of the environment sensors which could be used also for the security and working very extensively to offer the full security pack very soon on the market. The circuit breakers and the edge of actually like this is everything which we're doing before, now is going with a much faster speed because it's ready. Something which is most more important what we're doing from the software side, because if before, the Shelly is mainly recognized of the, to automate the smart homes because the application, our applications is made for home usage.
Now. Using the AI features, using the new platforms which we working for them for more than a year, now probably we can extend the coverage to our device for almost everything from the professional to the industrial automation. We've seen first signs that this one is highly appreciated from the installers and from the electricians, where they can exactly offer the specific service and the platform to their customers without to be dependent to our interfaces or even sometimes to our cloud. About the Shelly X, something which is also important, the number of products increasing. There is a more 30 + active discussions with the new distributions, but also we have a significant number of the products which is increasing.
By the way, what we've seen, not only us but also manufacturers is quite happy with the results from selling the devices powered by Shelly X. Also we've seen that the revenue coming from the selling the devices with the device which we're selling through our network powered by Shelly X is increasing significantly compared with the previous year. We continue the expansion which for Shelly X we're expecting scaling and monetization to be much faster until now. Something which is important, there's a question which you ask us many times, the factory. The factory is ready. The factory is ready for the production. We start making some test production.
We decide the factory, by the way, is very capable and it's very fast, and the high can produce a high quality devices, is completely automated. We decide also to start production not only for the Shelly X modules, but also to start production partially for our devices, especially Bluetooth, Zigbee devices for the security. We will produce from this factory in Plovdiv. We expect to go in the full production cycles until end of June, because now there's a preparation, now the testing, now we the team is training. Also we're choosing the right bunch, both of the devices we can produce in Plovdiv.
Our target is all modules which need to be delivered in Europe, and also almost 100% of the Bluetooth and Zigbee devices which could be automated and made without additional human with not so much employees and the human to be involved in production to be done to end of the second quarter. After that, we to produce these devices only here in Bulgaria. Something which is important because what I've seen, maybe there is not a good understanding what exactly we are doing.
We preparing on the 2nd of June, the special webinar for the investors, where not on the geek, not from the geek explanation, but also from the much more customer-oriented investor-oriented explanation and examples, we can show to everybody what exactly we doing with the premium application, what is the advances for the customers, what mean our fleet management system, and how the AI can drive us to the another direction.
We can show the different kind of the platforms which is related to the citywide things in different regions related to the completely building automation systems and something which allow our partners, electricians installed by everybody, and even the end customers completely to rebuild how they're managing and monitoring their appliances, houses, and buildings can do that even on the city level, which is a completely new area and direction which we're working and expecting also this. Also we wanna answer the questions how this could be monetized.
We can show some interesting data from our devices, how about our customer, how much they spend, what, how much energy we're controlling, and also a little bit a deep dive for the future when we talk about the energy contract, not only automation, but also opportunity Shelly to be one of the company which offering not only the device, but also energy contract to the customers using these platforms. Now Wolfgang will finish.
Yes. Thanks, Dimitar. I can only recommend that you join this presentation on the 2nd of June. I have seen all the parts of it, of course, and it's absolutely amazing what you can do with Shelly devices with the help of the software. I will come back to this at the end of my part once again. That's the financials. They all look in the right direction. Jana has explained this in detail. Now to the country performance. We see that in this quarter, last quarter, if you remember last quarter 2025, DACH was a bit weak in the development. That turned around, a little bit extreme if you want. DACH is driving in first, in the first quarter the revenue development. Rest of Europe is even a little bit negative. This has two main reasons.
One reason is that in Q1 last year, and that's why we added 2024 here, we had a big jump in revenue in one of our big countries outside of DACH, and this is normalizing here. We expect as well that this trend is normalizing over the year. That's nothing that will stay like this in Q2, Q3, Q4. This is something that will turn around, just comes from this one-time effect that we had beginning of last year in one of the regions. The second reason is, and that is something that is more and more something we think about, how do we continue reporting? We know that a lot of products in Europe, not outside of Europe, but in Europe, are going across the borders.
We cannot 100% say that what we sell to Germany stays in Germany, what we sell to Italy stays in Italy. We know that some countries are more exporting than activating, so that's something that we think about how to manage that. It's illegal in Europe, or it's possible legally with a huge effort to control that. We are not able to do that, and that shows that the demand is everywhere in the European countries. That's a positive thing. The negative thing is that, of course, this beside this, the problem in reporting that causes us, well, trouble with distributors if products are imported to their region.
In general, looking to the right side, and that's a very positive news, rest of the world is still on a small level with EUR 3.7 million in Q1, but growing by more than 80%. We hope that in the next quarters, Q2, Q3, we can report very positive news. Especially from the U.S., we have a couple of good initiatives there that look like they are materializing. If that happens, I don't wanna say we have a breakthrough there, but we are on an excellent way, and that supports, of course, the growth in the rest of the world, but as well, the growth of the whole Shelly Group because numbers start to be visible to a certain degree. Premium application. We have a target this year to reach EUR 2 million revenue, to reach 80,000 users.
We are on a good way. We already have 41,000 users after one quarter. The 80,000, we should be able to overachieve that. On the revenue side, we have a bit a strange curve, if you want. In the last year in Q1, we changed our accounting to a deferred booking of the annual revenues coming from from the premium applications. As you know, we always stress that we are very careful not over-pushing this because there are not a lot of good examples for paid versions of smart home applications.
Having said that, we will start in June and end of the year with cameras, and end of the year, the second camera will come, and customers are more used to pay a monthly subscription for cameras and for additional features, AI features in the camera, than they are used to pay for a smart home application. We think that our camera launch will support that development, and we are confident that we reach probably more than the 80,000 users, and the EUR 2 million revenue should be as well something that is feasible. I come back to the guidance, I show you here a bit longer-term picture for one reason.
What we all should not forget, when we issued our long-term guidance, that was at the beginning of 2023 with Q1 numbers before we published Q1 numbers 2023. On a basis of EUR 48 million revenue in 2022, we said that in 2026, we will make around EUR 200 million. Everyone looked at us and said, "You are completely crazy." We are on a very good way to achieve this target. That is four times the revenue, EUR 50 million-EUR 200 million, four times the revenue in that short period of time. On the EBIT side, we came from EUR 10 million EBIT in 2022, and we said we will make EUR 50 million EBIT in 2026, and we are even more confident that this number will happen, so we are on an excellent way. That is 5x the EBIT.
When we did this, everyone said, "You are completely crazy. That's not going to happen." A lot of you now ask us when we will increase our guidance for this year because this is not ambitious anymore. Of course, the % growth goes down because the basis is much higher. I come in a second to a different outlook. On the cash side, we have to admit that this has never been a KPI or something that we looked at in a lot of details. As long as we were able to pay all our invoices, to have enough money on the bank account to make the prepayments to the factories, everything was fine. We did not pay a big attention on that.
Our working capital, or sorry, our cash more or less went directly into the working capital. We plan to change that, and we have already changed that in Q1. Iliyana has showed some of the number and commented on some of the numbers. For the end of this year, we expect a cash that is somewhere between EUR 35 million and EUR 45 million. Of course, this is always as well a matter of do we pay a dividend? Do we not pay a dividend? Do we have bigger investments? What might happen there that has an effect on that. It should be a significant jump from the level that we kept the last years to the end of this year. That is what we have in our plans.
Looking at the first results, end of Q1, and here we look at the working capital specifically, and we look at the cash conversion cycle. Even with the high level of receivables that we had end of 2025, our cash conversion cycle was a little bit better than it was in 2024. After 1 quarter in 2026, we are 10 days better with our cash conversion cycle, so 267 days. We have reduced as well the receivable level a little bit, the days of the receivables a little bit. For the end of the year, we expect something between 220-240 days of a cash conversion cycle. We wanna continue making significant steps quarter-over-quarter to bring the receivables on a good level.
That will take one or two more quarters. The number end of the year is, from our point of view, a very solid one. What are we doing? We control the payments. We are continuing collecting receivables from customers. We are controlling as well that the sales team is not able to give over-proportional long payment terms without the agreement of Iliyana Krushkova. Processes are in place that this is impossible. Our stock level is on a good level, so we expect to keep it there, and we are working with our Chinese main suppliers to reduce the prepayment to an acceptable level, and there are ways doing this, even with the support of Chinese government and banks in China.
We are confident that we reach this level of 220-240 days, which would be significantly better than a year ago. Of course, in the coming years, this should continue to be optimized and is from now on our third KPI besides revenue and EBIT. To close this part, we will not give another long-term guidance. We will not this year or beginning of next year give you a three or four years guidance. What we already did end of 2024 in our capital market day in Frankfurt, we gave a long-term outlook. We said, let's say that 2026 numbers are in. They are not yet in, but we are confident. Guidance is confirmed, EUR 200 million roundabout. After 2026, the market is expected to continue growing with 10%-15%.
Here we just add our regional development. We now have 8 organizations in Europe. 6 of them are relatively new, and of course, we expect that they deliver significantly over proportional to a market development in their regions. That leads, without taking a number, you can make your own calculation, sorry, that leads to Shelly core business in 2030. On top of this, Dimitar touched upon new categories. Yes, we already have HVAC products. We have 1 TRV, but that's categories that we are significantly improving and increasing so that we expect additional revenue on top of the 10%-15% coming from the new product categories. Smart circuit breakers is basically not existing in the market, something that is very new.
The platform is something that will not only enable software and recurring revenues, but it will as well push the hardware revenue, because a lot of these functions are only able with the Shelly hardware architecture. This is the platform and the basis of what enables us to run platforms to go into city lighting and everything else. That's something that we did not want to add today because it takes 30 minutes to 1 hour minimum to go through this. Once again, on the 2nd of June, join the presentation of Dimitar. That will definitely be something that is interesting to see and that no one else is able to do. That leads to the summary. Q1, we have met our targets.
We are even a little bit above our targets in revenue and EBIT. We have made a first progress in working capital development, reducing the receivables a little bit. Just in this quarter, we have onboarded 1,400 installers, so that is amazing, and we continue to onboard them. We have an operation built up in four additional markets. We have mentioned them already. Recurring revenue improved, and we expect that this improves even more. We confirm the guidance around EUR 200 million, so EUR 195 million-EUR 205 million, around EUR 50 million EBIT, EUR 47 million-EUR 52 million EBIT. We plan to further improve our cash flow, and the measures are implemented and are on track, and we gave you a clear target for this year. Key products will support the 2026 growth, especially in H2.
Do we like that? No, we do not like that. As a matter of fact, we cannot just have wishful thinking and say, "When should products be there?" Everything that we do with the country organizations and with products will support heavily the H2 development. We hope that in 2027 this will be a bit more balanced over the year. The AI initiatives are helping us to, on the one hand side, to be faster in software development, as well we expect that this helps to push our ecosystem in the, with the premium user application. We have a very positive outlook in the, in our third region, rest of the world. Hopefully in the next quarters we can report very positive things about that. Solid Q1 and positive for the year 2026. Now we are ready for your questions.
Yes, thank you very much also from my side. Ladies and gentlemen, we are opening the Q&A session. Today, we're only taking your questions via our chat box, so however, if you have dialed in by phone, you're allowed to ask your questions in person via audio line, as you can't use the chat. For everyone who has dialed in by phone, please press star key nine to raise your hand and star key six to unmute yourself. We are now taking your questions. I have seen that there is one in our chat box already by Stefan Herold. He's asking, "To what extent are you using factoring to reduce accounts receivable?"
Right now, we are not using any factoring whatsoever.
All right, thank you very much. In our chat box, there are no other questions right now. There is one raised hand by Bastian Brach. You may unmute yourself now.
Hi, good morning. Some questions from my side. The first two are on the product side. You launched the Plug M and mentioned 1 million per month in production, it seems like the launch was quite successful. Could you give us any, like, customer feedback, early feedback? Also, was your expectation that mostly new customers would pick up this product fulfilled, or is the split between new and existing customers rather the same than your other products?
The, the existing customers, anyhow, you know, they will come, they order the, the device, but an attractive price under EUR 10, with this price we target new customers, because we want a day to try without worry about the cost pricing anything. We wanna really to go in the level when if somebody just thinking to prefer what to buy something from SONOFF, Meross, or Aqara, or even Tapo from TP-Link, they to choose our one because we offer new features. That's very interesting because currently, just for 1 week, we are number one in all platforms. We, you know that we doesn't sell in Amazon as a vendor, but there is, we selling our devices as a seller.
If you open the Amazon and looking for the Plug M, you will see that immediately this device take the first place by selling. Compare with everybody else, the number which Amazon reporting is 5 x better than others as a sell-out from the Plugs. This device is specially made to be high quality but lower cost. We invest a lot to prepare the production cycles, to prepare the materials, and to negotiate the better price for the materials.
Something which is important, because I just come back from China, there is a factory, as we say internally, factory number four is made only to produce the Plugs. And to, and they it's still developing because let's say I can say maybe 30% the moment of the manufacturing the process it's automatic. For the rest need the manual operation. We're expecting to end of the June, over 50% to be completely automated and probably maybe to end of the year to be 70%. Automation will help us additionally to improve the pricing. Even the lower price, we have a good margin for this device. We can offer good conditions for our distributors. Currently this works is offered mainly from through our channel.
Distributors just touch it right now because we need to receive the first huge quantity and deliver to everybody. Yes, to be honest, we're expecting demand to reach, especially for the after summer months, to reach 1 million pieces per month for which one we need to prepare the factory, for which one we need to prepare the enough raw materials for the device. That's the target. This is the product which is, let's say the door, the door opener for everybody else. We've seen at the moment that this is working very well for the very first signs because from all teams inside I listening that sales is over, the sales is more than they expected before significantly.
Okay. Thank you. The next question on the product side. Do you see the new products, and with that I mean the Shelly Plug M, but also later in the quarter, the new Smart Lock and the indoor camera to already have a meaningful contribution in Q2? A higher revenue growth in Q2 compared to Q1? Is that mostly H2, what we are seeing?
No, I don't. It's H2. I don't expect it to be significant. I'll tell you why. The first batch of camera will be produced in June. We will start selling in June. Usually what we're doing, this is something which is for us the security and the feedback from the customers is most important than to exactly to reach the revenue. Even that the revenue is lower, we prefer customers to be satisfied because next quarter this will be immediately compensated. The first batch of camera will be produced in the small quantity. Small quantity of 20,000-50,000 cameras.
Because the camera is also the first camera is oriented, is not AI camera, is the basic camera oriented to the mass customers with the all kind of the AI features based on the cloud, not built into the camera. We doesn't expect this significant to change, to change the revenue and to be the revenue driver. For the breakers also the first one they will come, but also is the first batch. Usually what we are doing, the first batch is the, is for the different devices, let's say 5,000-50,000 pieces. Depends of the preparation, it depends of the internal testings. Now we targeting something 15,000-20,000 for the every new device to be produced.
When this happens, we're waiting about two to four weeks for the customers' feedback. Are something need to be improved? What do we need to do? What is the then the device is coming in the 1,000 different environments, something which even we test, we cannot reproduce, fully reproduce. Then we start with the huge batches, which is 100,000 per month, 100,000 batches or, for example, 1 million. This exactly what happens with the Plug M. By the way, Plug M is ready from the beginning of the March, but the first batches which is I think something about 20,000-25,000 reach the market just in the beginning of the middle of April.
Now we start production in the huge quantity and huge number of the device, and we expect this in the end of June Shelly Plug M to have a significant effect of the revenue and also, the second half of the year to be much more significant. No, from the new products, I don't expect this one which I present, which will be launched in the Q2, to have significant impact of the revenue. We can do that, but we don't want to do that because really the sustainability of the products and the customer satisfaction is most important things for the company and for us.
Okay. Great. Understood. My second question would be on marketing. Quite a step up in that department. Was it primarily like brand marketing, performance marketing, or also more trade fairs you visited? Maybe a little bit on the marketing mix there.
It was a combination of many factors, but you should also note that what we see currently in Q1 in terms of increase in sales and marketing is a reflection of the investment that was done gradually throughout the entire 2025. As I mentioned, there was new establishments in 2025. Now in 2026, we also have four new teams in the local markets in Western Europe. In addition to that, there was additional marketing spend that is supporting general brand recognition and also the distribution channel. This is a combination of all of that, and you should bear in mind that is, it is an accumulated effect that we see now in Q1 when we compare to Q1 last year.
Okay. If we look at the more mature markets like Germany, was there also a step up in marketing spend, or was it roughly on a similar ratio compared to last year?
We are not reporting these numbers individually, Bastian, as you know.
Yeah. Okay. Thank you.
No, no, I can tell just it is depend because the main events, for example, Light + Building, when we have a huge booth with, almost more than 20 people from our team there, if this is covered from our German office, then this significantly increase the, the, the Germans, the German expansion for the marketing, which is artificial because this is made from the company as a holding and everybody from all countries. So many things is fluctuating and it doesn't spend for the marketing tens of millions, this to be significant. For example, I can tell, now, to be really visible in one event, we need to spend something close to EUR 300-EUR 500.
For example, especially if the event is U.S., we coming close to EUR 1 million because everybody expect we to have a big booth. We expect lots of the customers. We need really room to welcome them and to talk with them. This is for this one, even this, we doesn't report because this will be some kind of the numbers will not, they will not reflect the reality.
It's sales and marketing costs.
Yeah.
It's not only marketing costs.
Yeah.
It's not that we now invest EUR millions in Google or whatever, or for big events. It's as well the teams that we build up, and offices and a lot of things that are in the general costs.
Yeah. Perfect. That's it for me. Thank you very much.
By the way, Bastian, if we invest, if we continue investing that much in marketing and it leads to a stable 60% gross margin, I would be super happy.
Perfect. Thank you very much.
Thank you.
Thank you so much from my side as well. We have nine other questions in our Q&A. One from Ilya Angelov. Are there any developments with Amazon?
Oh, yeah. Oh, yeah. Yes.
Yes. Yes, we do.
We can tell you, we have absolutely no problems with Amazon because we make no business with Amazon.
Let's say, as a direct business, as a vendor, as a seller, you can find our products. We working as a seller directly. They're just using them as a marketplace, as every other part from the world. We do that with our partners, do that as a seller. I think we almost closed the last vendor account through the, through the, our, one of our partners I think in February or March. Yeah, there is also not easy to do that, because for the future, this is important, and we need to go in that direction.
Yes.
We working for the more partners, for the new partners. We now instead investing money in Amazon, which you don't know where they're going, and instead they to pushing us for the more margins and revenue, we prefer to working with more partners which do the all activity in Amazon, and this will continue by that way.
Yeah. We have to continue optimizing that.
Yeah.
Because currently that creates as well a bit trouble because someone buying products for one country, ships it to others, sells it on a different marketplace. We are more and more controlling that. In general, we are on a good way. We think that, having now found the way to be on Amazon Marketplace direct and as well indirect, that really helps to control the market a little bit more and creates less trouble in the market, and hopefully stabilizes the margin for everyone.
Thank you so much. There's another question from Jimmy Landermann. He's asking, "Last quarter you mentioned you were working with one of the biggest European lights manufacturer to make the devices smart. Anything you can update us on about this?"
Yeah, development take a time. The certification take a time. For example, at least one product to be certified usually take between 45-60 days. The process is ongoing. By the way, we will start bulk packaging the bulbs plus our devices in single package very soon. Probably for the lighting, this will be happens beginning of the second quarter, maybe end of June we'll start selling the devices. We already selling some lights, lighting devices powered by Shelly. We are selling these devices powered by Shelly. We work for something much bigger, which will be present in the second half of the year together. Really, developments take a time. When we start to talk about the new products and new product lines, new partnership, usually before product to meet the stores took about nine to 12 months. It depends on the complexity of the product.
All right. Thank you so much. Another question from Mark Sharugradsky. He's asking, "What initiatives are you optimistic at U.S.A.?"
Mark, I think you have asked this question already 20 x. We are in the process of signing with a new distributor. Contract is ready, just some very small details to be done, then we will fill his warehouse and his systems. We already had very promising meetings with his customers that are bigger do it yourself retail chains in the U.S. We do not expect that in one shot we will be in all their stores because it's a very big chain. It's not Home Depot, but it's a chain that fits much better to us. Then of course that step-by-step rolling out to all their network, that's something that will take some time, but that is very promising.
On the other hand, we are already in and we communicated that we are already in 30 stores of a chain called Micro Center, physical stores. They are selling very well. We have a not a special presentation. We are in their normal shelves every day, they are reordering. This as well gives very positive signals that we are on a good way in the U.S. If the sell-out is good in a physical store, this is the first time that we are in a, even though it's only 30 stores, in physical stores in the U.S. That's very positive.
All right. Mark is also asking, can you speak a little bit about when you expect significant numbers from Shelly X?
I can tell about the numbers. Significant numbers is let's say when you start with somebody like a lighting at the moment, it's easy to sell 1 million modules. 1 million modules on the prices which is, which we, the module it is, let's say something between €3 and €4, is not so significant compared with everything else. I think something which is much more significant at the moment is that many of the manufacturers asking us, "Okay, guys, you can give us Shelly X module, but on top of that, can you help us for distribution through your channels?" In this case, we playing the two roles.
The first one, we're selling them the module, which is not so, not so expensive in the total amount, but for another one playing as their one wholesaler distributor presenting, giving them access to our channels because this is, we, this is under, there is a fee for this one for them. Because the product itself is much more expensive than the module, we create additional significant revenue. Maybe next time because we are not ready at the moment, we can present exact numbers how much we make as revenue from the Shelly X products, but the numbers is good. Because this is now the EV chargers, there is currently HVAC systems. There is really the things which the price of the end customer price is much higher and we also is on the part of the chain this product to reach the customers.
Thank you very much. We have one question by Mr. Drobin Tomov for Mr. Kirsch. As we consider the company's long-term strategy, could you share your perspective on your continued tenure with the company and the factors that guide your commitment?
Can I hear that again?
Of course. As we consider the company's long-term strategy, could you share your perspective on your continued tenure with the company and the factors that guide your commitment?
You mean my personal commitment to the company?
I guess so, yeah.
I mean, I've signed a new contract that started beginning of the year for three years, so that's 2026, 2027, 2028. That is the current horizon. I said as well in the last calls when this question was asked or in the shareholder assembly, that I do not say that I will not sign another contract for maybe one more year or twice one more year, but at a certain point, I start to be as well ready for retirement. I don't wanna be the blocker for future developments. This does not mean that I'm not fully committed to develop and to bring the company on the track to 2030 and beyond. But I cannot I mean, there's, everyone has a day when he has to see that he has to retire.
All right. Thank you very much.
I hope this answers the question.
I guess so. Okay. We have three questions by Harry Watson. I will read them one by one. He's asking, please, can you share the difference in profit margin between each generation one, two, three, four of products?
Oh, no. No.
Okay.
We don't share this information because it's sensitive for the competitive side of view. We don't want to present the product mix exactly which one is the most selling products, which one we make money, for which one we. Because this is the different direction is changing also time to time. It depends of our target for the entering in some markets, so but definitely, no, this is very, very internal information and under protected rights. Yeah, yeah.
All right. Thank you very much. His second question is, please, could you share what is the contribution of relays to total sales, and how much is coming from plug and play?
Same here.
Yeah.
Yeah, yeah.
No, no, sorry. Really we cannot disclose this information. We don't want to because it's sensitive.
No, I think Jeff Bezos once said that the margin of his competitors are his opportunity, we don't wanna lead competition to copy our device. They even try, they anyhow try visually to copy our devices, we don't wanna push them more to do so because, they are anyhow jealous because a lot of competitors we talk to, they do not really understand how we are able to make 60% or 55% or 60% gross margin and 25% EBIT because they are far away from that. Most of them, not all. There are of course a handful that is doing as well excellent.
All right. Very understandable. His third question is, please, can you provide more color on the ramp-up of new products? How long does it take for a new product to contribute meaningfully to sales?
Yeah, I can tell. When you start developing the product, usually one product currently is developed for 6 months to be, to reach the certification state. The certification states take about additional two months. The products could be produced in the, as we say, the golden batch quantities. This mean about 1,000, 2,000 pieces only, and this piece is sent to our main customers. This testing internally, testing for the partners, for the distributors, from the installers, we give it to them to test it. This test take a month. When this is done, we are ready I think on months nine, we start producing the first batch of the product. This is the average time because for the some product probably maybe we need one or two months less.
For the some of them, we need one or two months more. There is a product, for example, which took more than a year. I cannot share with them because we, it's still not on the market. is not presented the products which took so long time. but especially there is such a product also which took, for example, 12 months to be developed, at least three months To be certified. Something which can show you, for example, for more than almost one year we working for the next generation of the Pro series and Pro devices.
Currently we still doesn't want to disclose when it will be released, because we want a day to be highly certified, no matter VDE, TÜV, CB, for all big to be certified and to have a stamp on them. By the way, for, unfortunately each of them need three, four months certification. They have a three, four month certification process. This is prolonged. Sometimes they return it back, we need to fix it. This is the process. Let's say average is the nine months before we to start the first production. That's, that's the period which is, which we have now.
All right.
It takes another six months to have significant revenues.
Yes.
What you said before is, "We have the first test batch, we wait four weeks."
Yes.
Next production cycle is another four to six weeks. We have shipment, depending if we use air freight or train. Significant revenues, I would say six month after launch.
Yeah.
For some devices we can accelerate that, but that is the safe side.
Yeah.
All right. Thank you very much. I think we have time for two more questions. One is by Cyril Cayer. He's asking, "Among your new clients, you mentioned Leroy Merlin, France. When will the launch of this new retailer become apparent?"
What we did now is we fulfilled all the technical requirements, because to be present in France in the retail, you need to be on a special platform. I forgot the name. We should have asked our French guy. Where they can pull all the data from this platform. That is done. Now we had a couple of meetings already about terms and conditions. Looks very positive. I expect this to happen not in June, not in June anymore.
Hopefully before the French go to their famous long summer break. If not, it will happen after their summer break. You never know. It looks very good. We are with Leroy Merlin Italy on a very good level. We started in Spain, now we expect in their mother country to be as well present. As well with the second chain, Bricoman, I think that they operate in France with the same group. That is going in parallel.
All right. Thank you very much.
Yeah. By the way, we are developing a special product that the French market is working for. I don't know if we can disclose this.
Fil Pilote.
Fil Pilote.
Fil Pilote.
That is a product that is only needed in France, and we developed this in a very short period of time. That's, that's a door opener for all these channels. That's something that enables the French energy providers to remote control the usage for water heating. That is a very big consumer of electricity in France.
Yeah. That example, we developed this product for 1.5 months. Now, pass certification for another 1.5 months, and we ready to, and we start producing the first batch for testing. The product is for less than 5 months we developed this product especially for the French market. This is more exclusion than usually the regular time for the development. We cannot develop so fast so many products because some of them needs much extensive working and the special parts requirements. Producing these parts especially for us is take time.
All right. Thank you very much. One last question from Mr. Jimmy Landermann again, "What is the price strategy for the smart circuit breakers? How will price compare to standard non-smart breakers, and what is the key functionality of them you expect will make end customers and installers to embrace them?"
First one, they will be significantly expensive than the normal breakers. The normal breakers is, it's very cheap. You can buy them for 2, 3 EUR, sometimes 5 EUR. For some special one could be a little bit more, but not in the range of the smart breakers. They will be significantly higher than the smart one. We doesn't expect in this stage everybody to replace all the breakers with the smart one. We expecting for the beginning electricians to install the smart breakers on the really critical environment and equipment which need to be monitored and controlling remotely. What the breaker can do and why? First one, always connected to the internet, always connect to the customer, local customer environment or to the customer application using the internet or not.
This is same for all shaded devices. They can be controlled locally and remotely. The second one, the breakers is enough smart, for example, detecting the over-voltage, over-current, and switch off the circuit in case if the equipment can be damaged behind him. When the normal delivery of the energy is restored, the breaker can switch on back and to deliver the energy to the equipment. The next one, for example, the breakers can execute the schedule. Something which is important because some of the big current appliances, they cannot be switched safely with the relays, and even sometime with the contactors. With the breakers you can do that.
You can isolate the whole places when somebody working remotely and to be sure that nobody can switch it on, because we can set the breakers to not completely to be, to protect the area, and if somebody try to switch it on, breakers do not allow that. This is the main things for the breakers, but it's most important that, really, and also another, measuring the consumption, giving the information now the people need, for example, to put next to the breaker. To execute this one, you need the breaker, you need contactor, and you need the power measurement unit with measuring how much current and voltages is going through these lines. Now you need a single device, just the breaker. Everything is built in.
This is the beauty because combining this 1, let's say we will be much more expensive than the regular breakers, but combining breakers, contactors, relay to control the contactors, and power meters as a single unit, then we will be significantly cheaper from what is the solution on the market right now.
All right. Thank you very much. Well, due to time, we will come to the end of today's earnings call.
May I just ask a question? Do we have some financial questions that are open?
Oh.
I mean, we have a couple of more minutes. It's not on our side. It's just last time we said we don't answer all questions. There was an issue afterwards. Is there something that is burning from your side that we should answer?
I mean, there is one for you, Mr. Kirsch. When will you give a forecast for 2027?
That's easy. 2027 beginning.
And, um-
Yeah.
One for Mr. Dimitrov. There is high inflation in Bulgaria and around the world. You're focusing on Kirsch, but when will you focus on increasing our dividend?
Okay.
I will answer that.
Okay.
We have our shareholder assembly in the near future in June. We are only paying a dividend with respect to our old and loyal Bulgarian shareholders. In general, we would not pay a dividend at all because we are not a dividend share. If you grow your share price by 30%, 40%, 50% in a year, and then you pay EUR 0.10 of dividend, a lot of shareholders ask me exactly the opposite question, "When do you stop paying dividends?" The invitation will go out in the next two weeks I think for the shareholder assembly that is end of June, and then you will see what we do there.
Okay.
All right. Thank you. The last question we can just do now as well. It's from Alexander Despres. He says, "Could we have some information on transportation costs, please?"
I know, I don't know the exact numbers. What I know, there is very, is day-to-day is difference. There is no significant increase for us for the transportation.
Yes.
Which currently we switching, not currently. In our long-term, we try to deliver them through train or over sea, but we preferring train because the price is not so high than the sea, and also is coming faster than overseas or with the ships. But we doesn't see, and that's something which, again, maybe a little bit more rumors on the market and the transportation cost, but we doesn't see some significant increase.
I can add some, s ome more color here.
Yeah.
In general, the transportation prices are going up. We have two effects that is driving that down. One is a volume effect, we are negotiating with our logistic companies. Because of our higher volume, we are negotiating lower prices, that keeps it at least stable for us. The second reason is what Dimitar just said. In the past, we almost had everything flying into Europe, Bulgaria. Now we discovered last year, we tried and started with very good success, that train transportation takes 30-45 days, that's an acceptable time gap if everything works well, if it's not for very new products that we desperately need. That costs 10% of the transportation by air freight.
There is another advantage if we go on the ship, a very small one, but that delays even more. We are optimizing the transport way, and we are negotiating with logistic companies, and that's why we see a chance in the logistic cost to that that's part of our cost of goods, to increase the margin a little bit instead of a threat from the logistic cost.
I think something which maybe nobody directly seen that in the last in the first quarter, end of the first quarter or middle of the beginning of March, we decrease the price of some of our devices. Everybody increase, we decrease because we see that we can do that. Even that, we have such a good margins, which mean that currently we try to be much more competitive with one of the main devices. You can check. We're not talking exactly device by device what we are doing and what we're targeting with that.
If the transportation cost is increasing significantly, our device is wide, so we can compensate. We have a room to increase the device prices. For us, as the main target of the company, currently number one is to acquire more customers. With the margins which we have, keeping these margins even sometimes I think this is a little bit hard, we need to because we need to acquire more and more customers.
It's better to invest more in marketing. Because we are in the growing stage, especially in the countries, outside of Germany, we need If you wanna be successful, we need to put significant money for the marketing investment, for the company, for the brand awareness, for the new products reaching the first-level customers because what we've seen, the first customer, the first device is never last for our customers. They continue buying after that our devices, and this is our should be our main driver and target for the future. That is good. That in combination, this is giving us the good profit and the good margins and that's just good. We can do all together.
All right. Thank you very much. Well, with no further questions, now we can close the earnings call for today. Thank you very much for your interest in Shelly Group SE, and a big thank you also to you, Mr. Kirsch, Mr. Dimitrov, and Mrs. Krushkova for your presentation and the time you took to answer all those questions. Should you have any further questions at a later time, please feel free to contact investor relations at Shelly Group SE. I wish you all a successful day, and I'm handing over to you, Mr. Dimitrov, once again for your closing remarks.
Okay. Thank you for your participation for everybody. We try to answer all questions to be much more, let's say, transparent, openly talking and explaining the, a little bit more from the business, how it's going in the process, how is it going inside. Of course, as a growing company, and trying different direction, working with different partners, exploring opportunities, but what I can tell, we will make a mistakes. That's definitely sure. If we doesn't make the mistakes, we will never be so, the company which is leading the market and which found the right direction before everybody else.
We try to limiting this one, I think successfully managing the company sustainability growth and everything. What we can promise, that will be lots of surprises from us in the future, and we can do the best to for the long-term delivering sustainability and to continue leading the smart home market in Europe, and, okay, hopefully also in the world.
In the world.
Yeah. Thank you very much.