Good afternoon, everybody, and welcome to the Q&A session for Shape Robotics Annual Report 2025. I will start the day. I hope everybody has time to connect. I will start the session in two minutes. Hopefully, everybody is here already. I can see that the stream has started. First of all, thank you for a very long list of questions that we have received on our investor relationships email and also on the social media. Without taking too much of your time, we should start digging into those questions from the beginning. First of all, we have received a question from one of our shareholders asking, why are the customer credit terms so long? Of course, this is one of the topics that has been on the lips of everybody, and we have discussed this topic before.
This question comes in light, let's say, in parallel with another statement saying that the Romanian payment terms are generally 30 days, and it's being considered a legal standard. I can tell you that this information is not correct. There is a recommendation, not a legal standard. We are operating in a business-to-business environment. Therefore, the payment terms are always being established in a contractual relationship between parties. Usually, these 120 days payment terms refer to specifically our main Smart Lab project, which is basically funded by governmental grants from the EU Recovery and Resilience Plan. The payment term for these grants is between 60 and 90 days at the consumer level, so I mean at the school level.
We have to understand that the entire channel from our vendors, our suppliers, motor suppliers, so on and so forth, to the school has taken this burden because any school that applies to a grant has to finance that grant only after and pay that grant only after the full installation of a Smart Lab or a Tin Can is occurring on that grant. Therefore, the reality is that that payment term from the moment of manufacturing to the moment of installation could be even six, seven, eight months. The whole channel covers it. This is very typical for this kind of business-to-governmental tender relationships. You have to take into consideration the fact that Shape Robotics in the last years has entered into a new dimension of business. First of all, look at the fact that we have doubled the revenue every year.
That made us participate in a larger, let's say, program of partnership with different distributors, vendors, so on and so forth. Generally, payment terms, just to give you an idea for the Tin Can product that you see on the left side of me, which is a Lenovo product, is minimum 90 days. These are very typical payment terms. The good thing about all this is that Shape Robotics has basically zero bad debt. Everything is happening in a very well-organized manner. We cannot simply push to change payment terms as they are in very strict frameworks, and we have to follow those frameworks. Second question, of course, I will follow also the questions that we receive live. I do not see anything yet. I see that we have around 50 people connected. Thank you for this.
The second question was, why hasn't the receivable issue been resolved yet? This receivable issue is, I think, artificial in understanding because a significant part of the group revenue comes in the quarter four. Therefore, when we launch this annual report, you will see that a lot of the receivables come in the last quarter. Automatically, by having this peak, this seasonal peak, this kind of gives a very unique perspective when it comes to receivables. Everything is in order in this example. Like I said before, we have basically zero debt in these four or five years since we have operated in the market. Another important question: Is Shape Robotics at risk of running out of cash or needing a capital raise? The answer is simple, no. We are not about to run out of money. We are constantly working to optimize this liquidity situation.
We have a very important partnership signed in December last year, which is the partnership with UniCredit Bank. It is very important to understand the fact that UniCredit Bank is our partner and our investor in this sense because they come together with us to create certain special credit facilities and certain solutions so that we can leverage this kind of long payment terms and to help us with our DSOs. This supply chain financing mechanism that we put in place with UniCredit is extremely well designed and tailored for our needs. Of course, UniCredit has a much deeper understanding of our pipeline, of our tendering process, and of our financial operations. By them giving a guarantee by signing this contract automatically, this is already even more than an auditor report. It is a recognition of our ability to be profitable and to perform in the market.
The risk, like I said, is not there because we already have a strong partner in this sense. Why are we asking the AGM to approve the issue of new shares? We have no specific plans to raise capital based on these shares, but there is a change in the EU prospectus regulation. I will read it because it is quite a technical aspect here. Basically, the threshold to issue new shares has been increased from 20% to 30% in 2024. This is a regulatory change, and this allows us to increase from 20% to 30% without necessarily having a mandate to raise capital. Another question: Are development costs being capitalized to inflate earnings? I think the answer is quite obvious.
We are an R&D company and an edutech company, and the investments that we do have to be capitalized, and we have to keep up with the investment in the field, especially in the field of AI and new developments of technology. Everything is done under the IFRS criteria. We have just to look at other companies similar to us in the market. We are around 16%-17% capitalization out of revenue when the market standard is around 25%-30%. These development costs are not inflating earnings at all. This is a normal procedure that we follow, like any other software development company does or hardware development. Another question: Can investors trust the numbers? Of course. These are financial audited statements and prepared under international standards. This question, I think, has a very simple answer. We continue.
In the meantime, I will check whether there is some kind of update on the live stream. I can see not. The sixth question: Why have salaries and executive compensation doubled? There are three primary reasons. First, in order to support the growth opportunities, the company had to grow. Of course, we had to hire new people. Also, we have new financial, administrative, logistic, operational costs that we have to take into consideration. Also, we have to take into consideration the fact that we have incorporated fully last year Shape Robotics Poland, former Scriwer. This comes with also a cost burden and an investment burden for us. Third, there is an executive compensation package that is DKK 4.2 million, which out of this 60% is an earn-out agreement that came as a compensation package because it is a technicality in the way we present it.
It is the earn-out agreement that was part of our acquisition of StoryKids in 2022. Sorry, 2021. So many years have passed since then. A seventh question: Isn't Shape Robotics too reliant on Romania and a few large customers? Romania has been a strong market, and it's a market where we managed to pilot a lot of our technologies. We are not reliant on the Romanian market. We are reliant on the European market. We are a European company that works and operates in good faith in the edutech market. Basically, everything that we are doing is following the leadership of the EU SchoolNet Foundation and the EU funds. Therefore, we are expanding with European expansion drives. Education has always been a priority for the EU funding campaigns in different horizons, not necessarily in the Recovery and Resilience Plan.
This somehow I will try to answer also the potential question that we did not receive, but always comes into, let's say, discussion if the funding continues after 2027. Of course, if the European Union still continues and the European drive still continues, this will continue. This is a priority at the level of 27 countries, and we have to take it as it is. There is no way to discuss this. We have a very big ambition to diversify our market. You can see that also in the annual report that we have started around a 12% increase in different territories that come outside the European Union and outside the projects from Romania and Poland and Moldova. Okay. I see that there are some live questions. I will come to them afterwards. Shouldn't Shape Robotics low growth to reduce risk?
This is a question that I think that we have already answered in other Q&As. We have presented a very clear guidance also for the year 2025. We basically have to follow the European Union funding. Therefore, our growth goes together with the funding, goes together with our expansion. Therefore, we do not see the growth as being a risk. Reducing or slowing the growth will not de-risk us at this level. Why do key announcements appear first on LinkedIn? I do not consider that the key announcements appear on LinkedIn at all. Announcements due to regulatory process appear exactly on the channels that are regulatory.
What we are trying to do is to lead a campaign of information also through social media so that our shareholders and partners be up to speed to day-to-day evolutions, not necessarily wait from one announcement to the other. This is somehow of a response from our side regarding the level of transparency that is desired by many of our shareholders. Another question, mostly it's a question that we have inherited for a while and that talks about change of leadership. In the last weeks, we have still continued to receive questions regarding the former CEO, our good friend André Fehrn. I have expressed it every time. The door for André was always open here. We have always been very transparent and very correct when we discuss about his leaving. Should he ever choose to come back or choose to join us, he has the tools.
He has the open door to do that, and he has all our full support. Therefore, I think these are questions that we can address at the AGM. We can discuss these things. I truly wish to know you and to see you at the AGM. I hope a lot of the esteemed investors that are partnering here will visit us at the AGM. All the details have been publicly set there. All these discussions can be done also at the AGM. Now, some of the more difficult questions: Why is the stock failing despite hitting revenue target? As a company, we are focused on running business and delivering what is promised. It is very difficult for us to talk about stock price, to talk about market condition, to talk about the whole situation. We are always close to the community.
We appreciate the fact that the community has been always—we are a community-driven share. There is also a question here from Kristen Hansen: Does Shape Robotics have an anchor investor? Who is that? Shape Robotics is a company that has started on First North. The investors that we have today as a main market are mostly the same. We have been supported heavily by Fundamental Invest. We have been supported heavily by the founders and by the shareholders that started this company, for instance, Moises, myself, so on and so forth. We have been part of this journey from the beginning. The more important part, we have been supported by the community. The community is the same. We are talking to the same people, but the regulatory context is different. Everybody that we see commenting on ShareWheel, we are following all the comments.
We are listening to what you are saying, but basically the only thing that we can do is to focus on the business. Whatever you wish to see in our business, we take in consideration more or less. If that can be applied, we follow those advices. We always want to be closer to that community. This is the situation right now. We have to follow exactly the path that we have to follow on the main market. We are a main market company. We have to follow the rules of being a main market company. Shape is not anymore the same company that started five years ago. We have doubled the revenue every year. We have encountered many ups and downs in that process. We're still here. We are still delivering on our promises.
Of course, we are close to you, investors, and we are appreciating your support. We really want to be closer and more open to you. You have to keep in consideration the fact that this is also regulatory. One of the questions that I keep on receiving was to share information about our pipeline or our tender procedures. I think that the answer is quite complicated here. We are also in a competitive environment. The fact that we are a publicly listed company, we share a lot of the information that also cuts the competitive edge for us. Therefore, we have to be transparent and regulated transparent, but also we have to keep our competitive edge. We have to keep as much as possible the projects inside our company and under secrecy and under protection when it comes to the competitive edge.
I think that the chat is going crazy. André is here. Hi, André. Yeah. I think that for now, the questions have been answered mostly. I will give another five or six minutes, let's say, if anybody would like. Let's see, Alex Wood, one of our esteemed partners. Share price developing, is everything going according to plan? How do you explain the significant decline in the share price? What do you believe is not yet reflected in the market? Again, I cannot talk about share price. What I can talk is that the fundamentals of the company are here. We are growing. We are expanding. I will tell you something very important from our point of view. Everything that we have started in one or two years has become profitable. The last quarter that we have delivered was the best quarter ever with high profitability.
Therefore, we have to take in consideration that there is also an element of time. We have to give time for the investments in Poland to happen. We have to give time for the investments in Moldova to happen. We also have to look at the fact that the first investments we did in Romania are highly profitable. Therefore, our recipe functions. Of course, yes, we still have a lot of things to improve. We have run a very—we have started together with the Board to look at things that we can optimize ourselves and to increase the rentability of the business. Everything that we're doing is towards the shareholder value and creating shareholder value. Therefore, you have to trust the process, and you have to trust the timing. We have always delivered, and this is going to happen also.
I have some questions that also come into my screen right now, and sometimes I get confused in under two screens. Hopefully, I can get that question from my colleagues. If not, I will look on the laptop. Thank you, André, for your support. Let's see who else. Okay. I think that this covers all. Are there any questions coming separately? Should we have any other—there is one more because I'm a little bit delayed. That's why I apologize if the stream is a little bit delayed. The question about the anchor investors, I answered already to that question. I hope this kind of concludes the situation. Again, I really want to make a short summary of everything that is happening in the last weeks and months. It is important for you to understand that we are here and we are doing our job to the maximum capacity.
Everything that is happening in the market is according to our planning. Payment terms, payment conditions, everything is subject to improving. The fact that we have the strongest financial institution in Europe backing us, it is self-explanatory in many cases. I think that the share price does not reflect our position in the market. That is what I can comment, and I hope that I can see you also in person. I invite you again to the AGM. Some of you we have met in person before last year. I will be there, and we will present also some new achievements in the R&D part. Thank you very much again for your support, and hope to see you soon in person. Thank you again.