Hello, everyone, and welcome to GN's conference call in relation to our Q3 report announced this morning. Participating in today's call is CEO Peter Karlströmer, CFO Søren Jelert, and myself, Rune Sandager, Head of Investor Relations. The presentation is expected to last around 15 minutes, after which we will turn to the Q&A session. The presentation is already uploaded on gn.com. And with that, I am happy to hand over to Peter for some opening remarks.
Thank you, Rune, and thanks to all of you for joining us today. Let me start with some highlights for the group in the quarter. The key message for the quarter is that our recent product launches are driving a clear improvement in business momentum. In the quarter, we delivered organic revenue growth of 2% alongside significant margin expansion. In Enterprise, we saw continued market recovery, leading to organic revenue growth of 1%. The Evolve3 portfolio performs well, supported by solid momentum in North America and APAC, and a gradual improvement in EMEA. We have now launched Evolve3 across the premium, mid-tier, and part of the entry-level segments. Premium sellout remained solid in the quarter, while the mid and entry-level products that started shipment in the quarter saw strong initial channel reception and double-digit selling growth. Gaming delivered 5% organic growth in a recovering market.
This was supported by further headset market share gains led by Nova Pro Omni. Both divisions maintained strong underlying gross margins, while both divisions benefited from the tariff refunds received in the quarter. In addition, we continued to prioritize selective investments in the channel to support future growth of recent product launches. Overall, this quarter demonstrates that innovation is translating into stronger commercial momentum and improved profitability. Let me continue with a few more highlights on Enterprise. Following a few difficult years of market adjustments, it is encouraging to see the ongoing stabilization in the market. Reflecting our recent successful launches, our Enterprise division delivered 1% organic revenue growth in the quarter. We saw further improvement in the headset segment, driven by successful expansion of Evolve3 across premium, mid-tier, and part of the entry-level segments, while the meeting room segment delivered healthy growth.
Revenue from frontline worker solutions and FalCom was expected in line with last year. Regionally, North America and APAC performed well, while EMEA remained challenging, but continues its gradual improvement, supported by demand for Evolve3 and a more balanced development between sell-in and sell-out. The adjusted gross margin increased to 60.5%. This includes DKK 78 million of tariff refunds, while the underlying gross margin level of 56% remains stable. Adjusted divisional profit increased by 9% to DKK 601 million, corresponding to a margin of 36.7%, reflecting the development in gross margin while making deliberate channel investments to support the ongoing rollout of Evolve3. Let me put the contribution from the new Evolve3 portfolio in more context on the next slide. The Evolve3 portfolio now addresses approximately half of the enterprise business and were an important driver of the return to growth in the quarter.
In Premium Bluetooth, we have now seen three consecutive quarters of solid market momentum. This gives us confidence that the initial launch momentum is being sustained by end customer demand. The mid-tier and entry-level products are still at an early stage of the launch, but the initial channel reception has been strong, with solid double-digit selling growth observed in Q3 2026. Moreover, as we shared before, we will maintain and accelerate the cadence of product introduction also into 2027, including both portfolio refreshes and extension across the remaining headset categories. We therefore see further opportunities to broaden the contribution from innovation and support the continued improvement in enterprise over the coming period. Turning now to gaming, where strong product execution also supported both growth and profitability. Gaming delivered 5% organic revenue growth in a recovering market. The performance was led by headset market share gains driven by Nova Pro Omni.
Keyboards also contributed positively. Regionally, North America and EMEA delivered strong growth, while APAC declined against a challenging comparison base. The adjusted gross margin increased to 52.9%. This includes DKK 75 million of tariff refunds, but importantly, the underlying gross margin also improved through pricing discipline and the success of our new products. Excluding the tariff refunds, the gross margin was the highest we ever have done in gaming, which is a strong testimony to our internal efforts in driving synergies across our business. This strong gross margin is achieved in spite of the ongoing tariff payments. Adjusted divisional profit reached DKK 179 million, corresponding to a margin of 28.5%. At the same time, we continue to target the channel investments to capture the growth opportunities ahead of the important fourth quarter.
One of those opportunities is the recent renewal of our mice portfolio, which I will cover on the next slide. Rival Pro and Sensei Pro are important launches for SteelSeries. They renew an aging part of our mice portfolio and are designed to support both growth and margin development in the periods to come. The products combined unlimited 8K performance with the world's first pure ultra-wideband wireless mice technology. They also offer advanced aim tools and software tuning, together with several form factors for different fits, shapes, and grip styles. As with all SteelSeries products, development has been grounded in the needs of serious gamers, and the mice have been tested with some of the world's leading esports professionals with very good feedback. The early market response has been encouraging. Reviews have been very strong.
Consumer engagement with the launch campaign has been significant, and we saw a high initial channel demand in October. The launch strengthens our position in a category where our revenue exposure is currently small, giving us meaningful room to grow over time. With that, I will hand over to Søren to take you through the group financials, our guidance, an update on the Hearing transaction, and our capital distribution plans.
Thank you, Peter. Let me start with the financial performance of our continuing operations in the quarter. Group organic revenue growth was 2%, whereas reported revenue growth was 3%. The adjusted gross margin was 58.4% compared to 49% last year, driven by healthy underlying gross margin in both Enterprise and Gaming, as well as the tariff refunds received in the quarter. Adjusted EBITA increased to DKK 413 million, equivalent to a margin of 18.2% compared to 8.8% last year. This improvement was achieved while making targeted channel investments in our ongoing launches. Free cash flow, excluding M&A, was DKK 45 million. The operational cash flow generation was offset by one-off costs in connection with the Hearing transaction, as well as timing effects from working capital built ahead of the fourth quarter. Net interest-bearing debt ended at DKK 9.6 billion.
On a pro forma basis, including the cash proceeds from the Hearing divestment, GN would have a net cash position. Let me now explain the main drivers behind the margin development during the year and why we are confident in the margin outlook. Year- to- date, the adjusted EBITA margin reached 8.1%, supported by a clear sequential improvement quarter by quarter during the year. Revenue momentum improved in the third quarter as recent launches across Enterprise and Gaming gained traction. In the fourth quarter, we expect further support from these launches as well as a traditional seasonality of the business driving higher absolute revenue. We are currently assuming that Evolve3 portfolio will continue to support our core Enterprise business with a positive growth in fourth quarter.
While we are seeing some timing risk in relation to FalCom in Q4, currently we assume approximately DKK 50 million in quarter four, leading to a full-year FalCom revenue of DKK 150 million against previous DKK 200 million assumed. Underlying gross margins remained healthy in both divisions. In addition to the third quarter included DKK 153 million on tariff refunds. We do believe that we are able to maintain our mid-50s gross margins in Enterprise and 35%-40% gross margins in Gaming over the coming periods, even in a period with elevated input costs. On operating expenses, we continue to make targeted channel investments behind the launches. This was partly offset by reduced general spending during the carve-out process. In addition, we have during the quarter obtained more clarity around the allocation of costs between the continuing and discontinuing business.
As such, we saw a significant sequential decline in G&A in the quarter, which reflects a catch-up on a too high cost allocation from previous quarters into the continuing operations. The average G&A level for the first three quarters is therefore more a realistic run rate level for GN at this point in time. The combination of improving revenue, healthy underlying gross margins, and operating leverage has resulted in significant sequential improvement in profitability over the year. These developments support our full-year guidance, which we are confirming today. As mentioned, we confirm our 2026 financial guidance for continuing operations. We are encouraged by the improvements across growth and margins we have seen during the third quarter.
For the year, we continue to expect organic revenue growth in the range between 0% and 3% and an adjusted EBITA margin in the range between 9% and 10%, excluding one-off costs related to the Hearing transaction. Let me turn to the next page to give you an update on the divestment of our hearing business to Amplifon. First of all, the hearing business continues to perform well, and we are pleased with the 5% growth delivered in the quarter on top of a demanding comparison base, driven by a strong initial reception of ReSound Sensia. The carve-out process is well underway, and we continue to make good progress as we are now in the final stages of completing the separation. Closing remains subject to customary regulatory approvals and completion of the separation process.
We remain confident that we will be able to close the transaction by the end of the year. On November 1st, we have concluded the internal demerger, which essentially means that we have carved out enterprise and gaming items into separate legal entities, which is one of the prerequisites of the closing process. As part of this, we have now also updated the expected tax payments. Compared to the development we have seen during the year, including the share price development of GN, Amplifon, and updated asset value across our businesses, we now estimate a tax payment of around DKK 300 million-DKK 500 million. Let me turn to our plans for the returning capital to shareholders following completion of the Hearing transaction.
Following the closing, we intend to distribute at least DKK 4 billion to shareholders by the end of 2027, supported by a leverage target of 1x-1.5x EBITDA. As a first step, we expect to launch a new safe harbor share buyback program of up to DKK 1 billion immediately after closing. The program will be based on our current authorization and is expected to run until no later than the next annual general meeting on March 10th of 2027, subject to the current limit on GN's holding of treasury shares. We then intend to cancel treasury shares and reduce the share capital. At the 2027 annual general meeting, we will seek a renewed authorization allowing us to continue repurchase of own shares. This would mechanically require a somewhat higher holding limit compared to the standard 10%.
Following that authorization, we intend to further distribute at least DKK 3 billion by the end of 2027. We are also reinstating our dividend policy of distributing between 20%-40% of annual net profit. Any dividend proposal will, of course, be subject to AGM approvals. In addition, further proceeds from the sales of Amplifon shares is intended to be returned to the shareholders as well. Taken together, this provides a clear capital allocation framework, invest appropriately in the business, maintain leverage within our targeted range, and return excess capital to our shareholders. 2026 has been a very special year for GN, with a lot of fundamental changes, and we are convinced that these changes will be positive to GN.
While we have executed the preparation for the divestment, we have also launched a large number of products across Enterprise and Gaming, which has helped us to turn our business into growth while demonstrating solid margins. We are now soon ready to turn the page for the next chapter of GN, and for the Capital Markets Day, we will lay out our strategy, priorities of how to successfully build GN into the future with the benefit of our customers, partners, shareholders, and employees. Therefore, please save the 24th of February 2027 for a GN Capital Markets Day. With that, I will hand you back to Rune for the Q&A session.
Thank you, Peter and Søren. That concludes our prepared remarks and the presentation for today. I will now hand over to the operator for the Q&A session. Please limit your questions to two at a time, please.
Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Your first question comes from Veronika Dubajova with Citi. Please go ahead.
Good morning, guys, and thank you for taking my questions. I only have two, please. What is just your view on the durability of the Enterprise momentum from here? Obviously, really great to see you return to numbers that it starts with a plus, not a minus. But I am just curious, Peter, if you can talk about the sort of visibility that you feel you have into Q4, and then more importantly, kind of any preliminary thoughts you have there on 2027, and just given the many moving parts in terms of sentiment, investment priorities from your customers. Just curious how you are thinking about that. I know I am asking you to speculate a little bit beyond, but that is the first one. And then the second one is for Søren on inflation. Clearly, anecdotally, there is a lot of discussion about electronic components or materials freight.
Be great to get your preliminary thoughts there on what that means for 2027 as well. I know you said you see the current margins on the gross margin level as sustainable, but presumably there are some headwinds we should be contemplating as we move into 2027. If you can give us some help quantifying those, that would be great. Thank you.
Thanks, Veronika. Let me start. We are, of course, very pleased with what we see here in Q3 on the Enterprise growth, and it is really driven by the great receiving of the Evolve3 portfolio, both the initial products, the ones we launched in Q1, and the further products which we now launched in Q3. There is an ongoing stabilization still of the market, but I think it is really the combination helping us. If we look into Q4, if we think about the core Enterprise without FalCom, we do expect to see a similar kind of momentum as we saw in Q3. This is really an ongoing kind of support for our product and growth. Early next year, we will actually launch even more products in the wireless category. So I expect us to have a good start also on the year in 2027.
While I mean, you cannot plan the future exactly, we have a great level of confidence that this is not a temporary growth. This is something we built up and now will take care of in the quarters to come.
Yeah, and then, Veronika, as you for sure know, and I think we have also seen in our business, that we have really been good at putting our operations together and taking advantage of delivering through one set of components suppliers. That has led to the underlying good improvements we have seen throughout the year, both in actually Gaming, but actually also holding up in Enterprise. However, I also think you are right that we are seeing a pressure on component pricing, and that is, of course, also what we need to factor into next year as a somewhat smaller headwind. I think our teams are doing, of course, what they can to leverage the scale we do have, but I think you are right that there is a positive, or in this case, a negative impact on the component pricing.
Are you willing to specify your kind of early thoughts on what that headwind could look like, or not yet?
I think it's a little early to specifically speak to that. Also, bear in mind that we, throughout the year, we also need to assess, we have launches coming up and how exactly they will also pan off and see how the mix will pan off in the business. So, we would like to come back to you, of course, in connection with the annual report, but just again, you are right on the component pricing. I think we have a very skilled operations team looking in and taking advantage of course, the scale we do have. But we would like to further give you clarity on that once we come into February. I think we have a good path, but it is something that, of course, we need to be mindful of.
Got it. Thank you, guys. I'll jump back into the queue.
Thank you. Your next question comes from Andjela Bozinovic with BNPP. Please go ahead.
Hi, good morning, and thank you for taking my questions. I have two, and they are both on Enterprise. The first one is just on the quarter, if you can comment on any level of stocking that you have seen for the products that have been just launched in the quarter, and do you expect this to have an impact on Q4? The second one, also on Enterprise, but more mid- to long-term . You have returned to growth after four years of decline, but do you think that this growth could fade away as we annualize these products? I am thinking not only about H1 next year, but more like H2 next year and later, especially because in the other channels, the other segments of Enterprise that you want to introduce new products, I feel like you are facing more competition, especially from the Chinese players.
I am just curious to your thoughts on the main drivers of the Enterprise market besides the product launches, and which of these drivers you are seeing now versus which ones need to improve to see better growth. Thank you so much.
Thank you so much. If we start with the stocking, I mean, for the new products, there is, of course, a natural tendency that there will be increased stocking around the new products, which is a natural part of launching. You need to make sure the distribution can carry your right level of inventories for new products. That happened for the premium products earlier in the year when we launched those in Q1, and now happened to essentially the mid-tier products here in Q3. But I think that the more helpful way to think about it, I think, is to look on the aggregate, the sell-in versus sell-out. This was now in stability in this quarter, so we essentially sold in as much as we sold out. Over time, I guess it is all about how well the new portfolio is selling out.
Here we are very encouraged by the premium products to see the continued very healthy sell-out of those. The initial receptions of the mid-tier products we launched now are also very positive. I think this is also broadly what lending confidence to your second question about the kind of success over time. The portfolio will be in the market a long time, and I think it is all about getting that continued good sell-out performance across the products. Then in terms of the drivers, I believe that the market overall aggregated really stabilized. We still see a bit the same tendency, North America and APAC a bit stronger, but EMEA, we also saw some good improvements. It is not fully back into the same strength as the other regions, but did improve in the quarter.
If we look over time, the market is, of course, broad with different kind of pockets. You mentioned Chinese players, and you mentioned us. We are very focused on being an innovator in the market, creating premium products and experiences. We feel very confident about the Evolve3 to be able to position us as such. We do not think this is kind of a short-term phenomena just around the quarters of the launch. We do expect this to continue into next year, and we will, of course, update you much more on how we see growth in enterprise when we lay out our guidance, and even more how we see the market long term at the Capital Markets Day. We have a good level of confidence that we should be able to continue to drive from now on some level of growth into enterprise in the quarters to come.
Perfect. Thank you so much.
Thank you. Your next question comes from Martin Parkhøi with SEB. Please go ahead.
Yes, great. Thank you much. A couple of questions on also on Enterprise and then on the margins. To Peter, your comment, and this will not just be a Q3, Q4, Q1, Q2 thing, but something longer also. Can you talk a little bit about your discussions with big corporates, which not necessarily run out and refresh this portfolio from day one? Do you see any anecdotal evidence for Jabra Evolve3 is actually promoting or motivating big corporates to finally do a replacement cycle? Then related to the headset, sorry, to the Enterprise business, I appreciate you say you expect to see a similar good momentum in the fourth quarter.
But can you discuss a little bit about what we have besides the headsets, anything we should be aware of with the FalCom video or BlueParrott that can change the overall growth rate for Enterprise in the fourth quarter? Then, Søren, as promised on the margin side, with a pretty good Q3, even adjusting for tariffs, would it be fair to assume that we should more look towards the high end of the Adjusted EBITA margin guidance of 9%-10%? And what kind of absolute OPEX level should we assume for the fourth quarter? I think that you said at Q2 that Q3 should be similar to Q1 and Q2. It was, of course, much lower due to the administration cost, but what should we assume for Q4? That was approximately two questions.
Two fairly rich questions, but very good ones. Let me start here. The way this works is that to transition from one portfolio to the other will take some time. For many companies, this is a process about trying the new products and then shifting over to the new products. I think that process is ongoing with many customers around the world. It has already started for the premium products, and we're in the early phases of that transition now for the mid-tier products. So, that's also why it's important to think about this. It's not like a one-quarter effect. This transition will take place over several quarters. Then I do think that absolutely the innovation is giving corporates a reason to essentially upgrade and change to new type of products.
The feedback we're getting from both the very largest customers we have, but also more mid-tier, is that they really like the portfolio, and many seems to be interested in doing the transition. So, we are encouraged by the initial reception, and that is part of lending confidence to us believing we're in the right trajectory here to drive growth over time. Then to the specific questions on Q4. I mean, if we start with the core Enterprise, excluding FalCom, excluding BlueParrott, we do believe you should see something similar to what you have seen in Q3. I don't want to pinpoint an exact number, but we grew in 1% in Q3, so expect something similar in Q4. I think that would be, I think, a good base assumption. Then Søren read it up in the initial remarks.
The situation with FalCom is that we now believe we will end the year on a total FalCom sales of around DKK 150 million. That is a bit less than what we expected initially of around DKK 200 million due to a couple of larger projects moving into next year. That is creating a Q4 headwind of 2%-3% compared to what FalCom did last year. That is, of course, then creating a bit of a counterweight to the reported enterprise numbers. The core, which I think is, of course, a majority, very stable and going in the right direction, you will have a temporary effect of the FalCom comparison in the Q4.
Yes, Martin. Then on the margins, I think, of course, it is really good that what we have seen here in the third quarter undoubtedly de-risk the full year, as you correctly say. Then you are, of course, trying to do the math of where we will land within the 9%-10%. I think what you should expect to see, and your question on OPEX, is essentially that the overall OPEX is normally a little higher when it comes to sales and marketing in the fourth quarter. I think when it comes to the R&D side and the G&A, then that is more a normalized version we are seeing. Again, bear in mind, we had this special G&A effect in third quarter. So, there you should probably more take the first three quarters and then see what is the average of that.
I think then you come at least quite close to an OPEX expectations that will be marginally up, but mainly due to the sales and marketing for us to support the launch and the higher top line.
Thank you.
Thank you. Your next question comes from Carsten Lønborg Madsen with Danske Bank. Please go ahead.
Thank you very much. I will try to do exactly two questions, but you never know where it ends, right? Let us start with a question on gaming. Based on this rather high step-up in growth for Q4, which sounds reasonable, but still, I would like to hear whether you have any type of visibility into some sort of order book, retailer inventory, sell-through, campaign startings, et cetera, because you are supposed to deliver a massive step-up in organic growth for gaming in Q4. Then to Søren, I think the missing piece of the puzzle on the margin could maybe be sort of what are you assuming for G&A costs going forward now that you had this reversal for the prior two quarters impacting this quarter? Are we now just seeing at a level of DKK 210 million-DKK 220 million from here?
Is that a reasonable level also into next year?
Thanks, Carsten. I mean, on gaming, overall, we have a good kind of trajectory of the gaming business, and the products we have launched perform very well. Then I think we have a bit belief, like many in the industry, that Q4 will be a constructive quarter in terms of market performance around the GTA launch, but also in general. So, we think there is good support to drive the revenue we are aspiring for here. When you look at the growth rates, it of course looks a bit daunting to step up, but I think it is important also to remember that last year, both market-wise and for our business, was actually a very weak quarter. We declined 12% year-over-year in the Q4 last year, so the comparison base is actually not that demanding.
I think that, of course, also helped the year-over-year growth when we are now moving into next quarter. But overall, we feel very good about where we are going with the gaming business.
When it comes to the further insights into the G&A, I think it is a fair assumption, as I also tried to say before, that on average, the Q1 to Q3 this year marks sort of what we expect to be a good runway coming into Q4. I would, however, also say that, remind you that the G&A is a combination of administration and IT costs. And, of course, where we spend our time right now, as many of you for sure will know, is in the separation area, and that is where we are spending all our effort and time to complete that. As such, we probably also have a quite muted, I would say, activity level, whether it is IT or it is also developing the business.
That is why I would say that it is still, we expect to be at the level you are expecting for 2027, but maybe we are also at a relatively low level coming out of Q3 and Q4. You should probably hear me say that I am not saying it is precisely going to go flat. I think we will have initiatives also next year that will support our business, and I think that is important to understand.
Okay. Thank you.
Thank you. Once again, if you wish to ask a question, please press star then one. Our next question comes from Niels Granholm-Leth with DNB Carnegie . Please go ahead.
Thank you. My first question would be on your net interest-bearing debt towards the end of the year. Provided that you complete the sale of GN Hearing, could you give us some kind of broad range around where would you expect your net interest-bearing cash position to stand by the end of the year? Secondly, when we look towards your CMD next year, could you talk about some of the investment needs that you will elaborate further on there and what we should expect here for the coming next few years? I guess that there is a need for you to step up R&D investments in video collaboration products and a few other areas. How should we think about your investment needs for the next few years? Thank you.
I think, Niels, on the net debt, as you surely have read, we are coming out of DKK 9.6 billion, so equivalent to what we came out of in quarter two. We are still of the expectations that we will generate a positive cash flow for the fourth quarter, and as such, we still expect around DKK 9 billion for the full year. Then you, of course, will have to top that up with the potential implications of the hearing sales.
Let me continue with the investments level.
Just to take, actually, we, yes, exclude the tax payments, which we are expected to have in 2027, actually.
Okay.
Hope that clarifies.
In terms of investments, to not run ahead of the Capital Markets Day, we look forward to go through this in detail. What we will do at the Capital Markets Day overall is, of course, explain the opportunities we see, the choices we are making. You will have a chance to also see the team, and we will lay out, of course, the more longer-term financials for us. When it comes to investment areas, I think that there are a few kind of buckets that we pay a lot of attention to. One is, of course, how we develop growth opportunities in a healthy way, existing or possibly new. I think that this can be either through organic investment or smaller M&A. So we will try to be clear on where we see the opportunity areas and how we think about approaching them.
In terms of R&D, it's important for us to think about R&D over sales as something we are keeping, what should we say, a good control on. We don't want that to run away. Don't expect us to come and say that we will have a very elevated R&D into the future or anything like that. For us, it's more than how we prioritize within the R&D organization on where do we think we get the best return on the investment, and then maybe complemented with some smaller acquisitions to accelerate progress in different areas. Then I think another area where we already have taken quite some investments, but we do like to continue on that trajectory because it's so important, is to make sure we have a world-class supply chain.
This is important to both navigate around in a changing environment, but also to make sure we can really deliver both with quality at time, but also at the right cost level. This is very important, and this is something you should also expect. But net-net, I don't think you should be afraid that we will come to Capital Markets Day and say we have a huge level of investments we need to do, and you should expect several years before you're starting to get return. That would be the wrong approach. But it's all about how we balance this over time so we can have a steady growth and margin expansion over time, and that's what we like to lay out.
When you mention smaller M&A, is that because you want to enter new categories?
It can be, or accelerate the progress in existing categories. I think it's one of the two. We see it's essentially that either we invest organically and do it ourself, or if we think that there are good kind of smaller targets that can accelerate our progress, that can then be the alternative essentially.
Thank you.
Thank you. Your next question comes from Carsten Lønborg Madsen with Danske Bank. Please go ahead. Pardon me, Carsten, you may be on mute.
Yeah, just a follow-up question here in terms of your margin uplift that you have previously discussed into 2027. Could you share your current thoughts on which items in the P&L that should support this lift in 2027? Why should we see lower ratios versus sales in 2027 versus where we are today in 2026?
Hi, Carsten. I think also in line with what we actually have said before, that we do expect actually that the benefits of the actions we have taken in terms of the structural costs we've taken out will actually be impacting multiple lines during 2027. So it's not one specific line that will as such be significantly positively impacted. So it will be spread across the lines as the way we plan it.
Yeah. Okay. It is only to understand. So for example, if you end up in that very high end of your guidance range now, are you then still seeing 2 percentage points from 10% Adjusted EBITA margin into 2027?
I think here that, of course, what we could see is a positive outcome. That is why we have the high end of the guidance, of course. That is a combination, of course, of various factors that could impact us. It could be a lower spend due to what we have ongoing, but it could also be the fundamental sort of lower spend patterns, as I spoke to before, that we will need to assess once we are out and on the other side of the transaction. I think it can go both ways. Some of the improvements that we actually stated originally, some of those can actually be the reason why we are also seeing a lower cost pattern here towards the end of the year.
But again, back then we said if it was a one-to-one, we would see a positive 2% uplift if the cost patterns for 2026 would be more or less unchanged. But if we are seeing a little bit of that in fourth quarter, of course, you can say the higher end of the 8%-9%, part of that is then already embedded in 2026. But fundamentally, we are still of belief that these 2% of the actions we took was the right action to take at that point in time. And we can also see that it is filtering through our planning for next year.
Let me just add one thing here also to the question to clarify. I think you all remember, but this year, of course, we are getting the tariff repayments that are equivalent to around 1%. So I think it is important, of course, that we have those in there, and it can even be slightly more than that, so 1%-1.5% or around that. So, of course, that is important. So when we say landing here between 9% and 10%, that includes that, then you need to deduct that, and then we have the underlying improvement, which we talked about, that, of course, will support into next year. So I think we are in a very healthy trajectory on expanding margins, and you will see some of that into next year already, of course.
Your next question comes from Martin Parkhøi with SEB. Please go ahead.
Yes, thank you much. Martin from SEB again. A few technical questions because I've been pretty obsessed the last couple of months on taxes. Now you reduce them significantly, but then I need to ask about some other tax aspects. Firstly, on the NationsBenefits, 19% ownership, I don't know where in the Hearing transaction that actually will land, but can you confirm that if at some point in time you will be able to monetize the NationsBenefits, then you will not be paying tax after that? Secondly, how will you be taxed on potential movements in the Amplifon shares after you actually get them in connection with the transaction?
Also a little bit technical questions on the net financials, because obviously you will enter 2027 with a cash position which you will bring down during the year, but should we, for modeling purposes, actually expect a net financial income in 2027, and then of course expenses after that?
Hi, Martin. Great questions, all of them essentially. When it comes to Nations, it is our expectations that that would be a tax-free transaction when that happens, essentially. When it comes to the Amplifon share, once we sell them down from, let's assume that we have 16%, 17% share or capital share there, then down to the 10% is actually tax-free, and then beneath that, it becomes more the day of when we sell it down, the additional movement in the share price will then be taxable. Then we're probably further out in the future, to be honest, but that's at least our current assumption of how it should be read.
Then finally, on the net interest, it is of course right that we, at a point in time, depending on when we do the share buybacks, that we will be cash positive, and that essentially would normally lead to a small positive interest of, a positive financial interest, you could say, during 2027. But I think it is money, and we will for sure hunt what we can on that account, but let's see when and the timing of the share buyback. I hope that clarifies it at least, that yes, you are right, it's probably more positive than negative at least when it comes to interests or financial items next year.
Thank you.
Thank you. There are no further questions at this time. I'll now turn the call back to management for closing remarks.
Thank you very much, operator, and thank you everybody on the call for your time and interest in GN. As always, if you have follow-up, please reach out to the investor relations team. Have a fantastic day.