Good morning, everyone, welcome to the Q1 2026 quarterly presentation from Appear. My name is Thomas Bostrøm Jørgensen, and together with me today, I also have our CFO, Per Øyvind Stene. Let's get straight to it. For Q1, we had a revenue of NOK 231.7 million, which is up a 42.6% year-on-year. This is, you know, really great result for the quarter. This comes, you know, mainly from a very strong momentum in the Americas, as we'll get to in a bit, but also a significant contribution from the EMEA market. Now, if we move to the gross margin, it came in at 70.1%, which is 2.7% down year-on-year.
The decline or the decrease in gross margin is predominantly a function of the product mix, adverse Forex, as probably most of you have been watching, and headwinds from the U.S. tariffs. We do believe that the gross margin will come up to sort of more normalized levels going forward. The underlying EBITDAC came in at NOK 25.9 million, which equals an 11.2% margin, EBITDAC margin. That's compared to NOK 15.4 last year. The drop in the underlying EBITDAC comes from the lower gross margin, essentially, and then higher operating costs, although the operating costs are according to plan. Free cash flow ended at minus NOK 28 million, which is down NOK 34.9 million year-on-year. This is predominantly affected by a higher working capital.
I'm gonna give you some updates from the quarter. I wanna start with some of the market trends. We just came back from the world's largest industry event in Las Vegas called NAB, there's some very clear trends that come through and I wanted to elaborate on. First of all, in the acquisition segment, we see a clear shift from transporting video over satellite to IP-based. This is a big trend driven by the U.S. government actually switching off. Well, repurposing some of the satellite bandwidth to IP and then auctioning that off for other purposes. Within content production or processing, as we call it, there's a couple of large shifts also going on.
One is away from sort of legacy video infrastructure to more IP-based infrastructure, and the other trend is away from hardware-only solutions into hybrid workflows, which is essentially hardware and software combined to deliver the best sort of video workflows for customers. I'm really happy to say that Appear's position, our product portfolio, our architecture really supports customers in, you know, making these transitions and really underpinning the market trends. I would say we are extremely well-positioned on both ends, both kind of the legacy and the future and being the bridge in between. Now, as we've elaborated on before, Appear is doing extremely well with a lot of the largest tier one customers in live and particularly in live sports.
We have a lot of the largest sports leagues, sports broadcasters, production companies in the world as customers. There is a finite number of those customers, one of our key strategies is land and expand, winning these accounts and then expanding within those accounts. I'm really happy to see that this quarter we're really showing this expand strategy in motion, and it's really working. Three examples here. One of the big American sports leagues that we started doing business with last year came back in Q1 and did a big deal with us for the X Platform into 30 of their stadiums across the U.S.
Secondly, we also won initial business with one of the biggest U.S. sports broadcasters last year, and happy to see that they came back in Q1 and also bought, you know, significant upgrades to their X Platform footprint. Finally, we had two European service providers that are buying infrastructure for in preparation for the big soccer event in the Americas this summer. You know, fundamentally across the board, we see that customers that are buying from us, they come back and buy more. Our land and expand strategy is really working. This is really important for us, you know, we are expanding our addressable market as a, as sort of, a key growth strategy.
Our X Platform, which is really our growth engine, and where we've been outperforming the market, you know, this is targeted at the big global strategic customers and kind of supports large scale events. For that, we have invested in several capabilities that really keeps driving up the competitive advantage of that Platform. In terms of expansion, we have, you know, we last year delivered the X5, which is a derivative of the X Platform that targets some strategic accounts, but also lower and regionals and lower scale events. We have started winning, you know, really good deals for that Platform, among others, a significant win with the PGA Tour. Of course, we have the VX Platform, which is our foray into the production processing environment.
It's a pure software-based solution which will drive recurring revenue. This platform in Q1 reached general availability, which kind of the first sort of proper commercial release of it, and it's already being used in live sporting events. We're really happy with sort of the initial response to the VX and at the conference in Las Vegas at NAB. I'm happy to say that the VX got a lot of really good response from the market and from a lot of our biggest customers. Fundamentally, the Appear Hub and XM are our self-service and fleet management tools. These are operational tools that we're offering to existing customers and tools that really sort of deliver operational stickiness and it's a really important part of our portfolio going forward.
The other thing that is happening this year and the biggest sports event this year is the FIFA World Cup. I'm really happy to say that a lot of customers have banked on Appear as the provider of, you know, live production technology. We have a very wide range of customers who have bought solutions to support their live production for this event. In total, the sort of commercial value of orders booked in relation to that event across Americas and EMEA over the last 12 months is around NOK 150 million. It really shows how, you know, the large events and sporting events in general are driving investment into Appear and our solutions.
I'm also really happy to see that the X Platform is really supporting the drive that a lot of customers are doing into remote production. It's really supporting customers in their investment into remote production, which is, you know, fundamentally a way to deliver live production more operationally efficient. I would say looking at our big success around the FIFA World Cup, the halo effect is incredibly important. This validation that we're getting from tier one customers throughout the world in relation to this event really rubs off on the market and we kind of see the effect on our brand and the engagement with customers as an effect of our success in supporting customers producing content from the FIFA World Cup.
We're gonna have a look at Q1 2026 in a bit more depth. First of all, you know, we'll come back to the consistent strong revenue trend that we're seeing. This chart shows revenue from Q1 2022 to Q1 2026. You can see the strong growth, you know, 33% CAGR in that span. Then as I said on the first slide, a 43% increase from Q1 2025 to Q1 2026. That actually, you know, that actually makes up a full 12 consecutive quarters on with year-on-year growth, which we think is really strong.
It's worth noting that between Q1 2025 and Q2 2025, there was a tariff event that kind of had a, probably had an impact on where business fell between Q1 and Q2 when you kind of look at the relative growth in the year-on-year growth in Q1 2026. Growth predominantly came from the Americas, and I'm really happy to say that this was the biggest quarter we had in the Americas market ever, up 54%, which is, you know, super strong. I'm also happy to say that we had good growth in the EMEA market as well. We were up 25% in EMEA. Both our main regions really delivered, you know, significant revenue growth in that period. APAC also delivered growth.
We're super happy with, as you know, we put in our regional center of excellence, our local kind of sales, direct sales capability in place at the back in the last year. We're now seeing sort of the first, you know, signs that this is doing what it's supposed to do, which is, you know, building a more sort of significant revenue line in APAC. Now before I hand it over to Per Øyvind Stene, our CFO, we're gonna show a short video.
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Good morning. I'm here to take you through the Q1 financials, let's start with the P&L. Thomas shared some insights on our revenues, they totaled at NOK 232 million for the quarter. That's NOK 69 million and 43% up from the same period last year. Looking at the gross earnings, our gross earnings for the quarter was NOK 162 million. That represents a gross margin of 70.1%. That's 2.7% down from the same period last year. The negative variance is attributable to the negative mix effects, Forex, and also increased U.S. tariffs with higher sales to the U.S. When we look at our operating costs, we are constantly iterating that we are investing in future growth.
If we look at the total cost of our operating expenses, including employee benefit expenses and also the capitalized development expenditures, which are really mainly development salaries, the total cost for the quarter was NOK 137 million, up 42% from NOK 96 million last year. It's also worth noticing that we exited the Q1 with 237 full-time employees versus 194 full-time employees at the same time last year. Our EBITDA was NOK 43 million at an 18.7% margin. Adjusting for the capitalized development expenditures, we get to the EBITDAC, which we believe is our main profitability measure.
The EBITDAC for the quarter was NOK 26 million at an 11.2% EBITDAC margin, comparable to NOK 22 million last year and a margin of 15.4%. Our operating profit for the quarter was NOK 36 million, 15.7% margin. The net profit for the period was NOK 26 million compared to NOK 21 million last year. If you look at the cash side, EBITDAC, here represented by the EBITDA and NOK 17 million of the cash flow from investing activities, provided a positive contribution. It was outweighed by increases in working capital. We had the increases in our trade receivables. We also increased our inventory levels. That resulted in a cash outflow of NOK 28 million.
That was compensated by a drawdown of market funds of NOK 30 million, resulting in a net increase of cash and cash equivalents of NOK 2 million in the quarter, and a balance at the end of the quarter of NOK 62 million. The cash and the cash equivalents, that's the most liquidy, liquid part of our available liquidity, but we keep the majority of our liquid funds in money market funds, and we exited the quarter with NOK 413 million in money market funds and the total available liquidity of a solid NOK 476 million. As I mentioned, our working capital increased during the quarter. Working capital as a percentage of last 12 month sales went up to 11%. That's slightly above the range of 5%-10% where we intend to operate.
At the same time, we see that there is a strong correlation with trade receivables and sales, and it was a strong sales quarter. We believe that we have good control of our working capital and that we closed the quarter with a strong financial position.
Thank you, Per Øyvind. moving on to the financial targets. we reiterate our top-line target for the full-year 2026 of NOK 1 billion, and also reiterate our medium-to-long-term targets, so revenue growth at 25%-30%, recurring revenue share in the interval between 15% and 25%, gross margin at around 70%, and EBITDAC margin at the interval between 17% and 20%. Now, before we move to the Q&A, I just wanna do a quick risk and ops. Looking at the risk side, clearly there, you know, being a electronic manufacturer, there is clearly an ongoing, you know, supply chain risk. I think both in terms of cost and in terms of lead time.
We are seeing, as everyone else in the market, prices go up and lead times increasing quite significantly. Our mitigation in relation to supply chain is partly our strategic manufacturing, you know, partnership with our contract manufacturer. We've had this relationship in place for 20 years, and that really puts us in a very strong position. We're also, and have been, I think since inception, very good at demand planning, and we typically hold a very substantial buffer of components that typically allows us to sort of have production for at least, or components available for production for around six months going forward. We have a buffer inventory for lead, long lead time components.
In terms of pricing, we are, as the rest of the market, increasing our prices to defend our gross margin. I think that kind of explains the supply chain risk. The other risk that is evident for everyone is tariffs. Tariffs are here to stay. At least based on the current regime, we believe that we have implemented all the sort of mitigating factors that are kind of available to us. All the instruments that are available to us so that the tariffs have as little impact as possible. We keep monitoring, you know, the changes in tariffs and the overall regime around the tariffs. We believe that the impact for us is contained and our margin is protected.
In terms of opportunities, we actually see, you know, like a lot of companies, AI emerging, but for us, probably more as an opportunity. For smaller scale productions, there is a clear trend now that AI is being used to automate and kind of drive content production. One of the real requirements from a acquisition standpoint at least, is that the feeds that come from the stadium are delivered with very low latency. Low latency from the stadium to the production facility and at a very sort of deterministic way. This is really one of our core strength. We see companies gravitating to Appear because this is something that we're really good at, so companies that are investing in more sort of AI-led production capabilities.
You know, fundamentally, we see that as a driver for Appear going forward. All right. I think that concludes risk and ops, and I'm gonna invite Per Øyvind over here and we'll go to the live Q&A. Please go ahead.
For those of you who have logged in, please raise your hand. Use the Raise Hand function in Teams to signal that you have a question. The first question is from Christoffer Wang Bjørnsen at DNB Carnegie. Please unmute yourself, Christoffer, and the floor is yours.
Thank you for taking my questions. Can you hear me?
Yeah, we can hear you.
Great. I was a bit late on the call due to conflict, maybe you've already touched on this, I have to ask. Can you maybe drill a bit more down into the growth in OpEx and cash OpEx year-over-year and kind of how much of this is sticky and how much of this is something that was kind of abnormal in the quarter? Just trying to get that, like how to think about the EBITDAC margin for the full-year, given that it's down year-over-year. Just trying to understand the operating leverage of the business, I guess.
Yeah.
Yes. First of all, there are no specific one-offs in the quarter. At the same time, the OpEx level is according to plan. We are, as I mentioned, investing in future growth and that's what we within our plans. We really have the three measures with the one, with the guiding on our top line and our indications on gross margins and of course the EBITDAC range that we are steering towards. We are using accelerator brake to get our results within that range. The cost level that we see in this quarter is what we have planned for for the quarter.
Is it like, you know, last year it kind of grew through the, through the year. Is there? Can you maybe elaborate a bit on how much of the growth in OpEx is due to sales commissions and such? When we look into the next few quarters where growth will come down again, like will OpEx come down again materially? I'm trying to get a sense of should we expect the EBITDAC margin to kind of stay flat-ish year-over-year, or could there be a material downtick in the EBITDAC margin for the full-year?
Yeah. We aim at keeping the EBITDAC margin pretty close to where we were last year. The 17%-20% range is kind of indicative to where we want to be. When it comes to the OPEX, we see that in Q3, we have a slight dip due to vacations here in Norway. Of course, we have added more people, so there will be an increase throughout the year. We believe that the changes throughout the year will be less than last year when we look at the total OPEX side.
Finally, just like a housekeeping question. There was like an initial share-based compensation, or what do you wanna call it, in the quarter. Is that kind of already reflected in the kind of the 17%-20% range, or should we consider that kind of an adjusted range? We have to subtract the NOK 3 million.
No, that has to be supported by the P&L, so that must fall within the range as well.
Thank you. I think that was strong growth.
The sound was a bit bad there. Can you repeat the question?
No, it's just saying thank you and congrats on the strong growth momentum.
Thank you very much.
Thank you.
Thank you, Christoffer. I'll pause for a couple of seconds for other viewers to raise their hand if they have any questions. There's one from Øystein Elton Lodgaard at the ABG. Please go ahead, Øystein.
Good morning. Yes, like Christoffer said, congrats on the strong growth. In the outlook statement, you're saying that you expect modest contribution from X5 and VX and compared to kind of previous communication, We didn't expect any material contribution from VX, but probably would have expected some material contribution from X5 this year. Can you maybe clarify that statement regarding the X5, what you're expecting contribution from X5 in 2026? Yes. I mean, you know, we've, the take-up of X5 and I think the, let's say, the forecasting and the underlying demand, you know, looks really good. However, it is a new platform in a market, in a tier two market that is slightly, you know, new for us.
Kind of that wording doesn't really reflect our trust in the product. We really think it's gonna be successful and deliver the value that we have been looking for. Don't read that as us, you know, being less confident in that product. We're actually really confident. I have to say the signals from the market at NAB was very positive towards the X5. Does it mean that, yeah, you say you're still confident in the product, but does that mean that may be kind of when we start to see a lot of revenue from it, that that is delayed a bit? Or is it just simply being cautious in statement and we shouldn't read anything into it at all?
I don't think you should read anything into it. We're still confident. We believe it's gonna deliver the planned revenue for the year. The fundamentals are there.
Okay. Thank you very much.
Thank you, Øystein. Christoffer has another question. Please unmute yourself, Christoffer.
Yes. Thanks. Just trying to understand a bit better what's going on in Q1 here again. Like, you noted in the report that the gross margin decline was driven primarily by product mix. Can you maybe just help us understand what particular areas drove that move in the quarter? You know, following on to that is for the rest of the year, the kind of the margin, the EBITDAC margin recovery, do you kind of expect that to be led both by gross profit margin improvement as well as kind of the lower growth in OPEX year-over-year?
Is this kind of you're now on the 70% level gross margin, which you have been expecting long term, and this is where we are now, this is new normal?
Yes. A good question. The gross margin this quarter, as we stated in the report, you know, is driven by product mix, Forex, and the tariffs. We believe that the product mix component that we saw in Q1 will, you know, not materialize in the quarters, you know, in the next quarter. We do believe the product, the gross margin will come kind of back up to the level it has been in the, well, that it was at last year, basically. I think this is more, this is more a one-off.
The improvement in EBITDAC will at least, you know, the improved gross margin will impact or deliver improvement in the EBITDAC margin.
We can also point to Q2 last year, where we had the 70.6% margin and we got the margins up again in the last quarter. We are defending our margins.
Thank you.
Thank you very much, Christoffer. We have no further questions from the audience. If there's no one in two seconds, we will hand back the word back to Thomas for some final words.
All right. Well, I think that concludes Q1. Thank you so much for listening and for following, and Per and, until next time.