Good afternoon, everyone, welcome to Qt's second quarter results. My name is Juha Varelius. I'm CEO of the company, and together with me today is Jouni Lintunen, CFO. He will go through the numbers in a bit more detail. As usual, I'm gonna talk just briefly about the business highlights on second quarter, then we're gonna have financials and then the outlook and guidance for the rest of the year. Business highlights for second quarter, our net sales grew 17%, and reached EUR 43 million, and growth was 19% on comparable currencies. Our EBIT margin was 29%, and EUR 12 million, 25% increase, and the profitability developed according to the our business plan. We have a very scalable, profitable business.
Our personnel total to 729 on June 30th, so that's an increase on 23 employees, and growth investments continued as usual. We had a very good start for the quarter, and then towards the end of the quarter, let's say the last mile was a bit weaker than what we were expecting. We were slightly behind what we were expecting for this quarter. If I look on the different reasons where we had a little softness, we were selling a bit more 1-year licenses compared to 3-year licenses, so that trend has a bit continued. There was a little effect. We also saw in consulting, that consulting developed slower than we anticipated, and that of course, we've been seeing all along.
Basically, our customers are looking to costs, their cost levels very carefully. They are reducing subcontracting where they can, and they're trying to secure their cash flow as best as they can. We did have some deals that went over to third quarter that we were expecting to close on the second quarter. On the other hand, I would say that that's pretty typical. That happens on each quarter, that some of the deals, they slip forward. I would say that that's fairly typical. We haven't seen project delays or project cancellations in any number, significant number more. We haven't seen that the... our customers would be postponing or delaying their development processes.
Basically, what we see, as always, that our customers, they are manufacturing and producing products for the markets, and they can't, you know, that work needs to go on, and that work is going on. We're selling licenses, and we're seeing projects going forward as usual. If I look at geographic regions, Asia was doing pretty much as predicted. Europe is doing very well, and the softness we experienced and the one of our last mile softness, so to speak, we encountered in North America. Of course, we all know that the inflation is high, interest rates are high, and so on, and the economy is slowing.
On the other hand, I don't think that the situation in our case has weakened, any particular way in, in second quarter, what it was in the first quarter, on our. Well, this is already the forward, how we see the market developing. I don't expect the market weakness to be increasing on the second half either. It was, say, a bit of a headwind here and there, which ended up that the we were EUR few million short of what we were expecting to, to close on this quarter. However, we did have a very good growth. I mean, still, we did manage to grow pretty well, and we did have a very good profitability, and we expect that growth to continue going forward.
We do invest on our growth plan, so we're still hiring people. We haven't changed our hiring plans, obviously. We introduced the 6.5 long-term supported version of Qt with lots of new functionalities. There was a new Axivion Suite 7.6 MCUs. On MCU, we've been gaining traction, so we have there good new customers coming on board, new versions on design studios, Qt Insight, Android Automotive, and so on and so forth. We do invest on our product, whole product portfolio as we're going forward, and we are hiring people in according to initial plan we've had. We're not slowing down on any on our growth investments, to put it short. Well, AI, artificial intelligence, is a hot thing.
This slide, I just want to highlight that we do follow what's happening on AI. We see that AI will be helping developers going forward, and we've done the first integration to Copilot. It's a GitHub tool, and we see various opportunities going forward, utilizing AI when developers are developing with Qt or doing testing. They can, it can be utilized in helping on simple tasks, so to speak. We don't see that AI, as we see it now, we're gonna integrate it, it's gonna be used together with Qt. We're following obviously how the development goes forward. We don't see a big business opportunity for us at this point of time, but we see that it enhances the product usage we have.
I, in other words, in Qt than in quality assurance tools. That was a very briefly on the performance on Q2. Like I said, we had a very good. We actually had a better start for Q2 than we usually have because the first couple months were better. Usual quarter is that the first two months are very slow, and then we have a very busy last month.
Well, we did have a very busy last month this year as well, but the kind of the the the last few deals that we usually do get and, and, and we make the final push, that fell a bit short on our expectations, so we fell short EUR few million on what we were expecting ourselves, where we're gonna end up. However, like I said, it came from a various different sources, all fairly small and we don't see any big change in the market, nor we do change that the people would be sifting into different technologies or any of that. In that sense, we see market pretty much the same as we've been seeing in the first half of the year.
With these words, I'm sure you're gonna have lots of questions on this. We'll continue on financials, and I'm gonna then talk a bit the future outlook.
Thank you, Juha, welcome from my behalf as well to the earnings call. Juha briefly discussed already about the revenues. Let's go through one more time, though. As I discussed, the net sales grew by 17.2%. There was some headwind, headwind from the exchange rates, namely -$0.6 million. The growth with the constant currencies were 19.0%. For the full first half year, the FX did have a very small impact. We grew by $21.5 million to $68 million... I'm sorry, $83 million, and the constant currency growth were pretty much the same, 21.5%. The growth was driven by the distribution licenses and developer licenses, we did see some softness in consulting side year-on-year.
We keep on seeing the maintenance line going down, going forward. I mean, it has gone down by 27%. This is as planned, this is outcome of the subscription transition we have been ongoing for 3 years now. We expect to keep on seeing the strong quarter fluctuation going forward as well. That's because of timing of the large deals, booking of the distribution licenses, and also because of the FX. For the second half year, we expect to be seeing a bad guy from FX. USD has gone or devaluated by quite a bit since last year, so that's gonna make a difference in our reported numbers, but obviously not in constant currency reporting. About the P&L. In Q2, growth was 17.2%.
The first line to name here is the materials and services, this again is the account which is used to book the third-party consulting services for our external consulting projects. It's down year-on-year, not only in Q2, but also for the full first half year, and that's the driver, driven by the softness of the consulting business as well. This is as well a good way for us to mitigate the expense level of our, our doings or profitability levels for consulting. We can balance the resources with the external help, and now we were able to then reduce the, this number because of the lower volumes. Our headcount went up by 146 during the past 12 months' time, out of which roughly 110 organically and by 40 with the acquisition of Axivion.
The personnel expenses grew by 21%, which is pretty much aligned with the result of the headcount increase. There's no major change in depreciation, and the other operating expenses are developing as well as planned. We are putting efforts on our long-term growth projects, and this then leads us, all in all, to the operating result, EBITDA result of EUR 12.5 million, up by EUR 2.5 million over last year. EBITDA margin went up from 27% to 29%. Amortization from the acquisitions is up from EUR 0.9 million to EUR 2 million, and that difference is driven by the Axivion amortization. Our operating result, EBIT, is EUR 10.5 million, improvement of EUR 1.5 million over last year, and EBIT margin is 24%.
There was $0.5 million cost in financial items, our income taxes were $2.1 million, which is roughly 21% or means 21% effective tax rate. Net profit is 18.2% or $7.9 million then for the second quarter. The same view actually holds for the whole first half. No major difference or variation between the development on the cost accounts here. We grew from $69 million to $83 million, and the EBITDA margin is up from 23%-24%, bringing us to EBITDA of $20.3 million. EBIT for the first half year is $16.3 million or 19.5%, and a net profit of $12.3 million.
Balance sheet, also in general, rather small movements all in all. Our operative cash flow was positive $21.3 million for the first half-year, primarily brought in by the, obviously, Q1. Our ending cash is $27 million, up by $18 million from early January. The trade receivables, accounts receivable, are about the same level as what they used to be at the end of the last year. However, the contract assets are down slightly, roughly $2 million now compared to the end last year. Equity and liability side, pretty much the only move in the short-term liabilities is the roughly $2 million earn out payment made in Q2 for the froglogic acquisition, and then some $4 million moved from long-term liabilities to short-term in the same period.
This is shortly the financials, and now I will hand hand it over back to Juha to talk through how markets are and the guidance for the year.
Thank you. Thank you. Well, we don't have a change on our long-term market outlook. We. The long-term growth prospects are very promising. Our runtime revenues are growing. We're doing big deals. We're having big customers, and they're delivering more products into the market. All in all, I s- you know, and we see new customers coming. On QA, we see that there is a great fit on what we're selling. We're selling a software development tool, so the it links very close and very well into software testing. We see a growing marketing there. We see an independent growing market on testing, because with our testing tools, people can test also software that's been not developed with Qt technology only.
We think that there is a big growing market over there. Well, we all know that the market is uncertain. You know, the interest rate hikes are probably now at least slowing down. The inflation is coming down. I think we're, you know, heading towards better times next year, but of course, this H2 is gonna be th- there are lots of uncertainties in that sense. On the other hand, do I see that the uncertainty has increased n-now during the first half? No, I don't. I think that this is... You know, if the things stay like this, then, I, I wouldn't say that the uncertainty, Well, it, it's not increasing anymore. I actually see better times ahead. I think we're, next-- we're heading towards better times.
We're not heading towards worse times. Of course, we do have wars and stuff like that. You never know where that's going. If I look on the Qt side, the development side, we do have big customers. We've been gaining new ones. They do product development on long perspective. When they start product development, they think many years ahead. They're putting factories together and start producing products. These investment decisions are not driven by short-term changes in the market environment, so to speak. There might be some postponements, maybe a quarter or two quarters. In general terms, these investments and this market goes forward. We haven't changed our guidance.
We still expect our guidance to be between 20%-30% year-on-growth on comparable exchange rates and our EBIT being in between 20%-30%. We don't see any change on that. If I'm looking next year, we, we, you know, we expect world to continue pretty much in the same traction as this year. That's basically the market outlook. If I think that what we saw in Q1, that how the market is developing this year, there is no big change in that respect. Oops. That's that that's it. We're gonna take questions first here in the room, right? Then we're gonna, then we're gonna take the questions on our phone lines.
Hi, Felix Henriksson, Nordea. I have a few. I can go one by one. Firstly, s- starting on the sort of miss on the last post that you mentioned late in the quarter. W- was that sort of related to customers delaying projects, canceling projects, or did you just end up getting lower value on the deals that you were expecting to sign late in the quarter?
No, we, we don't give kind of a last-minute discounts. What we usually experience is that the deal goes, and also we don't experience usually, a typical deal is such that the customer has done a proof of concept, and they've tested the technology. They've looked into the technology. There's been discussions that how they're gonna be using it and whatnot. Customer usually has done quite a bit of work, so they, at that point, they fairly seldom just walk away totally. Of course, we do lose deals during the course of the quarter all the time, but what we saw now is that the they usually go forward or, or they're lost.
We don't give discounts on the to, to close the deal because, I, I think that you could do that once, right? But then you kind of educate your customers that you give a last-minute discounts, and then you're kind of are hooked that you need to do it each quarter. I don't see any reason to go into that. It's the what we experienced was that the the deals we were expecting to come in, specifically in North America, that the they didn't, they didn't come in for many various reasons. I, I mean, to to put this into perspective, we, you know, we, we mainly missed our expectations, like, $3 million or so. You know, it's, it's, it's not a... It doesn't take a lot.
You know, it's not, it's, it's not a huge amount of deals in that respect, so, you know, we, we made EUR 43.5. We were. You know, I was looking for EUR 47 or so. The, you know, it's, it's, it's, it's not a huge miss in that sense. It's easy to do.
Thanks. That's actually very helpful. Related to this sort of shift from 3-year license maturities towards 1-year license maturities, that's typical, and there is a bit of uncertainty in the economy. How large of a factor would you say that was in explaining that $3 million miss?
Well, it's somewhere between EUR 1 million and EUR 2 million, I would say. Yeah.
You know, you obviously have a quite a bit of these three-year licenses coming up for renewal in the second half of the year. If I remember correctly, your guidance is sort of assuming that these will be renewed with, you know, maturities in line with historical patterns, i.e., three-year licenses. Do you sort of have any visibility based on your customer discussions on, you know, what type of maturities are they looking to renew these deals with?
Well, no, in, in, in larger scale, I don't. We had some renewals in now in our first half, not many, but few, and, and they renewed the, the licenses as is. The v- very small amount that we had 3-year renewals in the first half renewed again. I don't expect I don't expect churn, right? Because if you've been developing something 3 years, you're down the road, so obviously you're gonna continue. I don't expect churn, but of course, then the the the question is that do all customers renew 3-year licenses into 1-year licenses? We don't expect that either to happen. Yeah, there, that's gonna be on the second half, there are gonna be a lotter. It's kind of the first wave of renewals, right?
It's the first wave that we've done. The three-year deals are coming now in the second half. It's gonna be interesting to see how that develops. Of course, we're monitoring it, and of course, we can influence that also, that where does it end?
Thanks. Then on the second half of the year, obviously, now you've delivered 21% year-on-year revenue growth in the first half in comparable currencies. That sort of implies that you don't see or you will have to sort of maintain or even accelerate your revenue growth a bit in the second half to meet your guidance. What's sort of giving you confidence in doing this, given that you'll be also facing tougher comparisons? than in the second quarter?
Yeah, well, you know, you know, like I explained, we do kind of a different approach on estimating our revenue. One is that or our sales guys, they have their own pipeline, they have their own gut feeling, they have their best case, and then it kind of rolls up. I do have a visibility that what each and individual sales guy is estimating that what is their gut feel for the Q3? What is their gut feel for Q4? Where is their pipeline, where they're gonna end up, right? I have the big pipeline that we look from the other angle. We looked at the, and then, it.
Well, it, it's wrong to say that it's AI. It's not artificial intelligence, but it, it is statistical analysis being done that on this kind of a pipeline that the. Of course, we have history, so we analyze that in, in a bigger bulk, that where do we think that that's gonna end? Then our product management is following each and every product very carefully, and they're making their own analysis that where they think that on these trends, given the churn and everything, things are gonna end up. I have that kind of information put together. From the sales from the field, from sales guys, from statistically that the how the pipeline looks, and then we put that together, and, and there it comes.
The thing is that the, as you all know, the fourth quarter is gonna be the biggest quarter and December, and the last 2 weeks will be, you know, where the magic really happens. It's gonna be, it's gonna be again towards very year-end when the this all comes together. I now look the pipeline, if I look at where our estimates are and what not, the. I think that, I know that last year we were in a bit similar situation, and there were some some doubts that we may not even meet our expectation. I think that the, now where we are at and looking, we have actually even a better, easier task.
I don't have any reason to doubt that we wouldn't be able to deliver over 20% year-on-year growth.
Thanks. Then final one from me. You know, it's been some time since you gave your sort of long-term target of growing 30%-40% annually, and the world has changed quite a bit since then in terms of the macro operating and environment. Do you still find that sort of a growth range to be, you know, reachable for Qt during this strategy period over the coming years when we look at 2024 and 2025?
Yeah, well, we do have a strategy day with the board of directors end of September each year, and there we update that how do we see and how do we look that where we're heading, and how do we see that growth. You know, of course, 20%-30% year-on-year, looking into growing base number, you know, in absolute euros, you have to sell quite a bit more. We don't see... Of course, we see that in, you know, going forward, 2026, 2027, we need to do quite a bit more, and we will in that period of time. Like we've said in our strategy, we're building this company to be a multiproduct company, multiproduct strategy, QA testing tools are the first example of that.
I think that the testing itself, it's gonna grow pretty substantial in the coming years. If I see that how this growth is continuing, just the QA tools and Qt product itself, it'll continue growing years to come. Then it comes a You know, if I say that this will continue three years onwards, and let's see what happens then, then gradually, maybe it's the growth, 20% growth, 20%-30% growth rate just has to start slowing down because the numbers are getting so big. Are we looking and building other products into the portfolio to keep that growth continuing? Yes, we are.
We're looking to, to, to stay on that path, but of course, it's gonna mean also other offerings to, to come into the table. Then I'm talking about, you know, 2026, 2027 and, and beyond. As you know, it's, it's rather difficult to see many, many years ahead. The, it's, it's more of a that how are we gonna be doing it? Well, that remains to be seen in 2027 and beyond. The in general, if you look the amount of software that's coming into the market, if you're looking at the amount of software being put on products, if you, if you look the lack of developers, where we're actually helping our customers, the that, that seems to be continuing forever.
Jaakko Tyrväinen from SEB. I could continue on the license renewals. You talked a bit on the few number of these that were renewed now in, in the second quarter or the first half. Last year in Q2, you saw quite a many 1-year licenses or the maturity mix was also tilted towards the 1-year licenses. Did you see those licenses being renewed now in the, in the second quarter?
Yeah. Yeah, yeah.
Did you see any kind of extraordinary churn during this quarter?
No, we don't. You know, what we see now, we see nothing to be worried about for the second half, let's put it that way. Yeah.
Good, thanks.
You know, many of the product development projects where Qt is being used, they are multi-year, multi-year, developments. As a matter of fact, our customers, when some product ends, then they have a next one on the line and the next one on the line. We kind of are, you know, unless the customer decides to go with an alternative technology, we see a continuous usage of Qt. We do have customers that have been our customers for years, and the product is very good. If I look what the competing technologies are doing, we do follow them all the time very carefully.
I haven't seen that they would be taking any market share from us or, or, or the things being changing in that particular set. In fact, Qt product is very good, and our customers that are using Qt are very, very happy with it. That's, of course, the cornerstone. I mean, you know, once, once the product is not competitive, then, you know, no sales can save it, but when the product is very good, then, then we're alive and kicking, and it is very good.
Good, thanks. My second one, you mentioned the bit of a soft per- for performance in consulting. However, we don't know the number for the sales number for consulting. Could you give some color here? For example, how much you, you kind of, missed your own expectations in consulting in the second quarter or the first half, just to understand? Follow-up here, have you seen or are you seeing the slowness in consulting to continue towards the second half?
Yeah, I think that the customers, you know. Well, first to your question, how do I say? I said that $1 million-$2 million on the conversion rate, $1 million-$2 million on, on, on consulting. That's, you know, those type of ranges we're talking about. So small amounts, but, you know, when we kind of miss our expectations for $3 million-$4 million, you know, it doesn't take a lot, right? Do we expect? Well, consulting is a supporting business for us, too, first of all. I mean, it's there to support our customers when they use our product, so it's not our primary business in that sense. What we did see is that the customers are, you know, businesses in general are getting more cost-conscious overall in different industries.
Our customers are looking at where can they cut their subcontracting and whatnot. Do I think that that's going to continue in the second half? Yeah, definitely. Is it going to have a huge impact on our numbers? No, we're talking about $1 million or $2 million, so the, you know, it's not substantial. Are we looking to grow the consulting going forward? No. You know, I've said that the, it needs to be less than 20% of our revenue. As a matter of fact, I think it's, you know, half of that, what we see today, and it's gonna be less and less as we go forward.
Now in a non-typical way, if we look the positive things, the the distribution revenue has been developing favorably, and we've been attracting new customers, big customers. That's been going favorably. I think that the on a QA, the more we look into that business and the more we see into the future in that business, we see actually a bigger opportunity than we see before, so those are on the positive side.
Good, thanks. Regarding the softness or, or slowness in the U.S. market, you mentioned there, has that trend also continued in the, in the third quarter? In your own analysis, what is driving the slowness in the, in the, in the U.S. market? A follow-up here as well, is it just the market or, or, or have you seen changes in the competitive environment there?
Well, on competitive environment, I haven't seen changes, so the... In that sense, I, you know, it's same old in that sense. Do I have a one particular reason that I would know that, you know, what caused? I... No, I don't. I think it's a bit of a market, you know, many, many different things. Obviously, we're having a very close eye on North American market and the... Of course, we can, we're going to get it back on track, so to speak. Why do I think that we're going to get it back on track? I don't see... In our markets, I don't see United States being that different from Europe or from APAC.
In that sense, you know, if we're selling well in Europe, we should be selling well in North America as well. I think that it's a bit of a bad luck, bit of a bad timing, and a bit of different problems here and there. We need, we need to get our execution better. I'm not saying that it's because, you know, inflation and markets and whatnot. We need to execute better, period, and we will.
Good, thanks. My final one, on the maintenance revenue line, which naturally comes down, due to the license model change, back in few years ago. Could you help us, when do you see that declining trend in maintenance revenue to stabilize? Because it should stabilize at some, some point, so.
I think that's a rather good one. I think we are about that time right now. I mean, there are not going to be new maintenance contracts, for example, renewed. It's all gonna be kind of subscription license mode that we are selling. It will stabilize, too. There are some still running, generating some revenue still, not, not being renewed anymore.
Good. That's helpful. Thanks. All from my side.
Hi, Waltteri Rossi from Danske Bank. I think actually most of my questions were answered, maybe on the quality assurance business side, I think, in the pre-silent call, you, you painted a picture that it could be a very lucrative business in a few years. Just curious, how big is it right now? How do you see the market is the competitive environment there, and can you give any, any more specific guidance on that?
Well, we acquired, we acquired roughly $12 million. It's been, you know, We've, we've acquired $12 million. Would we acquire anything that would dilute our overall growth rate? No. Would we acquire something that dilutes our EBIT, EBITDA? No. They, they are performing, they are performing on par or better than the Qt. If I look the, if I look the competition and competitive environment, it's, I would say that. Well, both products are very good. Axivion product is, is, is, is like a Formula One in that, you know, it is, but Squish and Coco are also world-class products, so they're very good. They fit very well into our strategy that we have a world-class product.
If I look the competitive environment in QA, the market is more fragmented than, than a software development market. There are very many various small players in that market, serving different use cases. Do, do I expect to see their consolidation? Do I expect there to see that customers will eventually wanna use less products that, that that, that do more functions than, than many product for different use cases? I think that that consolidation will happen. Same way that I think that in software development, it doesn't make any sense to develop different screens, for example, in different technologies. Instead, it's gonna consolidate.
That's the cornerstone of our strategy, that we have a horizontal product in Qt, that you can build everything with Qt, so you can build a whole product portfolio from low-end to high-end, or you can build a digital cockpit in a car. I think the same will happen in testing eventually, that the fewer products will, will do more tasks. I think that the on architecture, where Axivion fits in, it's for architecture improvement testing, and if I look the many of the problems customers are having in their software development, it's because of a architecture is a bit of, let's say, spaghetti in, in, in some sense.
Axivion product is great, not only looking into that spaghetti, but also telling that where do you have problems, how to fix them. I think that the ... It's particularly good on safety critical things. Where do you see safety critical things? It's like in automotive, you know, if you think you have brakes and clutches and whatnot, they need to work, they need to be safety critical, it fits, fits very well in there. Axivion usually goes into a bigger projects where you wanna make sure, for example, that the architecture works fine, it, it's a very good product. I think that the, there's gonna be even more need for that, that the market sees as of today.
I, I, you know, I'm not gonna give you a timeline, but if I look QA as of today, what I see in my mind is like Qt in 2012, right? That's how I say it's gonna go forward. In 2012, I said that in 2021, Qt will make 100 million, and nobody believed, so I, you know, I don't bother saying that what QA is gonna be five years from now, but it's gonna be substantially bigger, that I can promise. Profitability is good. It's a product business. There is... Okay, you have-
Hi, good afternoon. It's Matti Riikonen, Carnegie. A couple of questions also. If you think about the revenue share of consulting and compare Q2 against Q1, was there a significant decline, or are we just talking about the small decline, meaning-?
Small
EUR 1 million-EUR 2 million?
Yes.
Okay. Thank you. Regarding the maintenance revenue that was already discussed, is it, is it correct to assume that with your desktop customers, I mean, the old customers, if they discontinue using Qt and then end up paying the maintenance revenue at all, is that the reason why the maintenance revenue is also dropping, or is it solely triggered by the change in the licensing model so that the revenue recognition is different?
It's solely because of the rev rec. You know.
if you have a perpetual license, by nature, you can be using that, I mean, for a longer time, but you will not get any updates or any maintenance if you didn't have the maintenance part. We are not pretty much selling it at, at, at all anymore, so it's gonna be all subscriptions or ... That's the only driver in that.
All right. Fair enough. If we think about the split between distribution license revenue and developer license revenue, was distribution growing faster in first half than, than developer licenses? What is going to happen in the full year, according to your expectations? Is distribution going to accelerate, or will it have the same revenue share as it had in 2022?
Oh, that's a tough one.
We do disclose the distribution license revenues.
Yeah
once a year.
That's why I'm asking, because if you did, I would not ask this. I would see it in the numbers.
Right.
Oh, that ... Yeah, that's... it's a good question. I think, we need to look into it and get back, but, how do we-
Well, let's... I, I think we did put it in a way that, I mean, distribution licenses and developer licenses are both growing very well right now. I mean, that applies to distribution as well, and I guess that's as accurate that we want to go at this point of time.
Yeah, the prediction, well, well, they are growing well.
Okay, fair enough. When you talked about the 20%-30% top line growth, and you were also discussing your future, did you just downgrade your midterm financial target of growing 30%-40% in the previous, previous, dialogue?
Ah, well, I, I think I was fairly vague that the... I said that we're gonna have a board meeting in September, and then we're gonna set up targets going there. The, so if I look the, if I look the... We were talking about, yeah, we were talking about 20%-30% growth on the Qt product and how long that will last. So I was referring to that at some point, that growth obviously will start slowing down. It, it's not gonna be, like, dang, it, you know? Why that percentage will start slowing down is because of the base number is just getting so big that it, it won't hold. Then I said that the, obviously, we're gonna look for a new product, initiatives.
We're building a multi-product company to keep up our growth levels, as stated before. That was basically it. I think that, fair to say, we're gonna have our strategy meeting with our board of directors, and then we're gonna set up our outlook for, is it 3 or 4 years? Don't know yet. Then we're gonna communicate that, so that's the right time to communicate the long term. We're... What I was trying to say is that obviously, you know, 3, 4 years down the road, the Qt itself, you know, the actual %, it'll be growing in euros, but the actual growth % to keep it high up, that's, that's not gonna hold, obviously.
The whole, this kind of a growth projections, protections need, additional product, products for our offering, and it needs also the QA product to take off, which seems that it will.
All right. Good. About the order slippages, you described them as regular, fairly normal, so there were no kind of major drama in those. Some slippages, but nothing extraordinary that would make the miss more understandable.
No, no. I, I think that the what came a bit of surprise were that some deals that we were really expecting that they're gonna close, they- there was a slippage. The kind of the, the last mile push, which happens during the last basically 2 or 3 days, that was a bit softer than usual. Of course, you know, given the numbers, that there was bit softness here and there, we're not talking about a huge effect. I would say that the you could take that as our regions do vary in their strength. Sometimes, usually they are on par, pretty much even, now we saw a bit more softness in North America than, than the other regions were doing pretty much on their expectations.
Which kind of gives us. We don't see a any changes in the market, per se, that the, you know, it's the Europe and APAC were able to make their gut feelings, so to speak. USA was a bit soft.
Right. Then finally, what makes you optimistic about the second half? If we think about the top-line growth range, which is pretty wide, from 20%-30% usually companies start at the middle, and then they hope they won't end up being at the low end, and also hope that they would be at the high end. Are you now hoping that you would meet just the low end or- - or something more?
Our guidance is 20%-30%.
Okay.
Fair enough. Thank you.
Thank you. We have a couple of minutes if there are any calls on the line. Oh, one more. Oh, sorry, sorry. I'm sorry.
Antti Luiro, Inderes. One quick one before we give the call
Yeah, yeah.
Call people on the line.
As many as you like.
I, I think you mentioned on distribution licenses that it's actually looking a bit better now than expected a bit before, if I heard you correctly. I know there's been a bit of changes on that front, like the volumes came down from the chip shortage time, and now you know, mentioned it's a bit better. Is it volume or price driven, now that it looks a bit better?
Volume.
Yeah. Is this coming from what the customers are communicating towards you or, just the source?
Well, I think we gave guidance already last year. I, I... On some event, I said that this year is gonna be, you know, the distribution licenses will be growing. Then I was asked that how, how do I know? I said that, "Well, I know that there are pre- product launches coming into the market," so that's what's driving it. We do have customers that they, they've done their development, that the products are rolling out, and the runtimes are coming in, so it's, it's volume. Yeah.
Yeah, right. Now the volumes that have been coming in have been at or above expectations?
Yeah, yeah, yeah, yeah, yeah. You know, We do get runtime revenues from many different sources. Even if some customers may have some trouble, You know, I think that the there are still global shortages on some parts here and there, but in general, I think, you know, world is going in the better direction. Funny enough, people are spending money.
Surprising.
Yeah.
Also the verticals and how they're performing, I know consumer and automotive have been maybe, on the lower side compared to other industries, but have you been seeing any change now recently in how the verticals are performing?
Nothing material. No, no. No, nothing material. The consumer electronics, medical, automotive, they're all... Although if you think automotive, for example, it's a, it's a long-term business, right?
To start designing a car, putting it into the market, and rolling out, it's a, you know. Short-term implications in the market don't really affect what they do. You know, they've been. If they have the capacity to build the cars, they'll build the cars.
Yeah. Right.
Yeah.
A short one, did you have any big deals in Q2?
We did have, yeah. Well, I... You know, that's another thing that we haven't defined, what's a big deal, so they're getting bigger all the time, right? We, yeah, we, we did... We do have, we, we did have some bigger deals over there, and I think we're gonna have... Well, I'm sure we're gonna have bigger deals in Q3 as well, so it's a combination. Yeah, and, and, and we'll, you know, there are, there are a few deals on the Q3 I'm gonna, you know, we're gonna close. In, in, in that particular manner, our deal sizes are getting bigger. Yep. In general.
All right. Thanks. it's business as usual now?
Yeah.
Yeah.
Yeah.
All right.
Do we have any on the line?
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. There are no more questions at this time. I hand the conference back to the speakers for any closing comments.
Okay. Thank you very much for the participation. Thank you very much for the good questions we had. To conclude, we had a healthy growth in the second quarter. We were a bit short on the expectations, but we were able to manage, say, a very good growth with a very good profitability. We are maintaining our guidance intact, 20%-30% growth year-on-year and 20%-30% EBIT for this year. If I look for the remaining of the year, our pipeline looks good, and we're very confident that we will be able to deliver on those expectations we have. Thank you very much.