Welcome to Huddly's Q1 Presentation 2025. My name is Rósa Stensen, and together with me I have my CFO, Abhijit Banik. You just got a sneak peek of our new product launch, the Huddly C1 AI-driven video bar. We're extremely excited to launch this product, and we will come back to that in this presentation. On the Q1 results, we report a revenue of NOK 45 million, compared to NOK 33 million at the same quarter last year. The main growth in the quarter is driven by the channel business, showing a 55% increase year-on-year. We also see that the strategic business is increasing, and we expect that to increase significantly through the year. When it comes to the gross margins, we are delivering strong gross margins in the quarter, with 53% compared to 48% at the same time last year.
In Q1, we started the rollout of Huddly Crew to Microsoft offices globally, and this will continue into Q2. Similarly, Shure launched the IntelliMix bundles, which have the Huddly cameras included in the bundle and have had their first customer shipment now in May. When it comes to Huddly C1, we are extremely proud, as said, to launch our own product with audio and video powered by AI this week. We are globally launching the product at InfoComm in June, followed by a roadshow with Lenovo and Microsoft. When it comes to the strategic review, the board has closed the strategic review process, and we will come back to that later in the presentation. On the outlook, we are in Q1 delivering according to the business plan as put forward last quarter.
However, we do see that the market uncertainty and the volatility with regards to the tariffs may impact the situation. Back to Microsoft. As said, we are globally now rolling out Huddly Crew and Huddly L1 to Microsoft offices, and we are obviously extremely proud that Microsoft has chosen Huddly to be the standard for their large and medium room meeting spaces internally. When it comes to the IntelliMix bundles, these were launched at ISE in Q1 and got a great reception by the market. Now, shipping in early May, the customers can enjoy the IntelliMix bundles from small, medium to large meeting rooms, featuring the Huddly IQ, Huddly L1, and Huddly Crew.
To give you a bit of a flavor of who our channel customers are, the government sector is increasingly—we are getting increased traction in the government sector, and Sykehusp artner is one of those examples. Sykehusp artner is a government institution in Norway that supplies meeting rooms of 5,000 in the southeast region of Norway. Why do government institutions choose Huddly? They mentioned examples such as the low maintenance cost, the long lifetime of the product, the ESG perspective, but also the IT security. As Huddly produces their products in the EU, we have all the standard compliance, such as TAA, on our products. Back to our products. Our product roadmap, as put forward last quarter, we are continuing to deliver on. As we mentioned then, we were going to bring to live in 2025 an audio and video product.
Now the time has come. This week, we launched Huddly C1, our most powerful product to date. It has over 20 x the AI capacity of our existing portfolio, bringing high-performance AI into every meeting room, not only on the video side, as you would expect from Huddly, but also on the audio side. We have worked together with our partners on an extensive go-to-market plan for this product. We started the introduction of the product at ISE in February with great receptions with customers and partners. We are continuing now in Q2 a roadshow with Lenovo and Microsoft in cities such as Oslo, Warsaw, Paris, London, and Milan before we do the global announcement and launch in InfoComm in June. For the second half of the year, we will continue the roadshow in the U.S. together with Lenovo and Microsoft.
We are obviously very proud to have such strong partners echoing the AI importance into everyday meeting space. We look forward to going on this roadshow with them. On that, I give the word over to Abhijit.
Thank you very much, Rósa. In this part, I will go a bit more into the details of the outlook and the financials. Let me first start off with the outlook. In December last year, we communicated a new business plan towards 2027 with an ambition to get to cash flow positive towards the end of 2025. We defined three different strategic pillars. Number one, increasing strategic revenue and channel revenue. Number two, monetizing on AI and thereby sustaining our strong gross margins. Finally, strict cost control and disciplined investments. In the last quarterly announcement in February, we reiterated this plan, and we maintain our outlook in this quarterly announcement as well as we are according to the business plan. However, we do acknowledge that there is a certain degree of uncertainty in the market with regards to the recent developments in tariffs and different trade conditions.
As you are probably aware of, there has been quite a lot of trade tensions between the U.S. and China for the past four to six weeks, and tariff levels have varied between 100% -1 45%. However, in the recent days, that level has been negotiated down to 30%. In Europe, there has also been announced tariffs, and however, it is at a significantly lower level than comparison with Asia. How does that impact Huddly and us as a company? In order to understand that a bit better and our risk exposure, I'd like to go a bit more into our supply chain setup. In this slide here, you can see an illustration, and you can see that most of our components are sourced from China. These components are then transported to our contract manufacturing site in Poland, where the components are assembled into finished goods.
Depending on the customer and the customer type, these products are then shipped to the customer or shipped to our fulfillment center in Norway. Once at the fulfillment center, we send and ship these products to our distributors globally, both in the U.S., Europe, and APAC. It is important to acknowledge here that it is the distributors who carry the responsibility for both the shipment and for duties. Hence, they have the risk exposure with regards to increased tariffs. Once they arrive at the distributors, they then distribute to the resellers, and finally, they distribute to the end customers. How may that impact Huddly? Let's start to look at it from a company level.
As explained in the last slides, there is an impact on the distributors with regards to increased costs, and as a consequence of that, Huddly has decided to increase the cost to the end customers. It is important to acknowledge here that Huddly, we preserve our margins while at the same time protecting the margins of the distributors, but the end customers are then absorbing most of the costs. We have already seen industry-wide price increases, and many of these price increases may have a different impact on price sensitivity. However, it is important to note that for many of Huddly's customers, such as FT 1000 customers, they are large B2B customers and typically tend to have less price sensitivity than many others. It seems like Huddly is in a favorable cost position with regards to manufacturing.
As explained in the previous slides, we have manufacturing in Poland, whereas many of our competitors have manufacturing in China, Malaysia, and Vietnam. From a more macroeconomic perspective, we do see a lot more uncertainty out in the market with several market participants deciding to postpone their decisions on investments. This may impact Huddly, and it may lead to customers postponing their purchases or other strategic initiatives. Overall, it is still a bit too early to say anything conclusive about how this may affect us on a net basis. However, we are monitoring the situation continuously and will do mitigative actions when deemed necessary. One thing we do know for certain is that the tariff situation has impacted the strategic review process. Just a recap before I go into the details. The company initiated a strategic review following interest from a global player in autumn 2023.
The aim of the process was to evaluate the company's long-term direction and partnerships. As communicated last in February this year, the company expected to conclude the process in Q2 2025. A lot of things have happened since then. Of course, the tariff situation, as briefly explained in the previous slides, has led to a significant increase in market uncertainty and hence effectively closing the window for M&A opportunities at the moment. We do see that the M&A activity is at an all-time 15year-20-year-long low at the current. As a consequence of that, the board will therefore end the strategic review process for now, but remains open to revisiting strategic opportunities should conditions change materially. While the transaction is not anticipated in the near term, Huddly has through the process created and strengthened relations with global industrial players, which may benefit us in the future.
The company is executing according to its business plan, and its AI-based technology and products are recognized as being best in class. The board is confident that the significant commercial progress since last year has further strengthened Huddly's position and potential to create significant shareholder value. That concludes the business review of the quarterly presentation, and I will now move into the financials to provide more flavor into the numbers. Let me first start off with the revenue. Revenue in Q1 2025 ended at NOK 45 million, which is a 37% increase year- over- year. This is mainly driven by strong increase in channel sales versus same quarter last year, as well as strategic sales picking up. First, looking into channel, channel experienced a 55% year-over-year increase. It was a decline if you look at versus Q4 last year.
However, it is important to note that there's a certain degree of seasonality in the channel business. If you look at it from a year-over-year perspective, there is a sustained growth in the business in channel. With regards to strategic revenue, which is a very important part of our business plan, we are starting and delivering on value in this regard. As presented earlier in this presentation, we are rolling out products to Microsoft offices, which is expected to continue in Q2. We have ramped up deliveries to Shure in Q1, and we are expecting to increase the deliveries in the coming quarters. In addition, we are actively pursuing new strategic partnerships, which will increase the revenue base with strategics. Moving on to the gross margin. Gross margin in Q1 was strong and arrived at 53% versus 48% in the same quarter last year.
This is reflected by the marked appeal for our products with our AI-enabled cameras. Q1 showcased a favorable product and customer mix, and the quarter also did not have any significant scrapping or other gross margin-reducing effects, which was the case for a few quarters last year. Now we have discussed revenue and gross margin, and let us move into the cost base. If you look at the P&L statement, the OPEX for Q1 increased. However, that is mainly due to an increase in non-cash items according to IFRS. In this case, this is because of the introduction of a new employee share incentive-based program, which increased the P&L recognized in the cost. If you look at it on a cash cost basis, we still have strict cost control, and we have previously announced the implementation of a cost savings program of NOK 12 million on an annual basis.
That is expected to have a full effect from May this year. During this presentation, we have showcased the C1 product, a very exciting development for the company. The investments that we put into this company in terms of R&D capitalization is a very important part of that journey. Capitalized R&D in Q1 was NOK 20 million, which is in line with previous quarters. We still have a strong and very good organization of engineers, 61 in total, and 45 of them are working with AI, software development, and machine learning. This showcases that Huddly is a software-oriented company. Going forward, it will be important to defend our position with multi-camera systems and also to enable the shipment and scale-up of the new C1 product in Q3 2025. Finally, I'd like to wrap up with a cash flow.
End of 2024 cash balance was NOK 160 million, and end of Q1 cash balance was NOK 93 million. Operational cash flow was a negative NOK 21 million, but that is an enhancement in comparison to previous quarters in last year. If you look at financing, we raised a total gross proceeds of NOK 25 million from a subsequent repair offering, which was oversubscribed. That concludes the financial part of the presentation, and I would like to leave the word back to you, Rósa.
Thank you, Abhijit. With this, this summarizes the presentation we wanted to bring to you today. In summary, the three pillars in our business plan we are delivering on: the increased revenue both from channels and strategic partners, in addition to maintaining and protecting our high gross margins, but obviously, as well as Abhijit is saying, we are adhering to a very strict cost control and careful investments. With that, we will welcome you into our Q&A section of the presentation.
Hello and Q&A. Now, Jon Øyvind, thank you for joining us today. We will go into the questions. The first question, what is the main reason behind your year-on-year revenue growth? As we explained in the presentation, we report a revenue of NOK 45 million in Q1 2024. This is a 37% increase year-on-year, mainly driven by their channel sales revenue, which saw an increase of 55% year-on-year. The next question, when do you expect to sign a new strategic partner? This is obviously very hard for us to say in public, time-wise. However, what we can say is that attracting new strategic partners and new strategic partner revenue is one of our main priorities according to the business plan. We are actively working with both existing and new strategic partners to see future opportunities.
We will report back as soon as that is appropriate. Most of your competitors offer AI solutions. What sets Huddly apart? What sets us apart is the technology and the architecture. What does that mean for our customers? It means that we have technology as we have our AI is built on the edge, means on the actual units themselves. It reduces significantly both the installation cost, but also the installation time the products are deployed. A new question. When will your new product C1 start contributing to revenue? Our C1 product, we are super excited about our new C1 product. It is a new AI-driven video bar, so meaning we are delivering both audio and video into the rooms. We have informed the market that we are planning to start shipping that in Q3. We revenue recognize when we ship.
There is a question, how much of the revenue changes year-on-year and quarter-over-quarter is down to change in NOK/USD? Abhijit, this I will give to you.
Yeah, there's obviously been changes to that, but it is important to remember that we both have some of our, well, our revenue is partly based in, mostly based in the U.S. dollar, but also our cost basis also denominated somewhat in NOK as well. There's been changes on revenue and over quarter basis. The specific numbers of that, that I can get back to.
I think we are going to enter into our final question. Wow, there are many questions coming in, just giving it a bit of a time. Okay, there is a question here. Given the current cash burn, can Huddly expect new financing before the end of the year? I'll be giving this to you.
We have during this presentation communicated that we are, according to business plan, where we have ambition to get to cash flow positive towards the end of 2025 and have a full year cash flow positivity in the next year before finally getting a strong cash generation in 2027. Apart from that, we are continuously evaluating and monitoring the situation and will take necessary measures if needed.
We will enter into our final question. Why have you decided to launch a video bar and thereby moving into sound in addition to video? If we start with the market, we see from analyst reports such as Frost & Sullivan that the growth in our market segment is going to be mainly driven by two categories going forward: the multi-camera solutions and all-in-one endpoints such as video bars. We now, with having C1 both deployed as a standalone or as part of our Huddly Crew multi-camera solutions, are well positioned to play in that market. Obviously, we are very excited that we launched the product this week and we are getting great reception from partners and the market.
The reason we are bringing now AI, our AI and machine learning, which we have been accelerating in on the video side, now into the audio side as well. Why are we doing that from a business perspective? Bringing the entire full-end solution of the experience in the room gives Huddly as well as more autonomy with regards to dependency on third parties for supplying the solutions into the room. We could not be more excited of bringing this product to the world. It has been an ideation in Huddly for almost six years and now it is finally here. With that, I would just want to say thank you to all of you for participating in today. If you manage, if there has been any lag in the questions coming in, please do not hesitate to reach out to us.
You can always reach us at ir@huddly.com or go through our webpage, huddly.com, for any questions. We are going to follow up and answer you there. I say thank you guys. Thank you for today. Have a nice day forward. Thank you.