Good morning, and welcome to Huddly's Q1 presentation. My name is Rósa Stensen, and I have with me our CFO, Abhi Banik. In Q1, we report revenue of NOK 48 million, up 7% year-on-year, driven by strong growth from strategic partners. The gross margin is 47% and an improvement from 44% in the last quarter. Our key focus areas have been to enable the strategic partner revenue. In addition to maintaining our partnership with Shure, we have signed Lenovo as a strategic partner.
Jabra showcased a new product portfolio, and we have received our first Microsoft certification together with Barco. Our partners have in addition undertaken significant go-to-market activities, preparing for the first end-customer shipments in Q2. On the product side, we continue to evolve the Huddly Crew platform. Huddly Crew is now the first recommended solution in Microsoft Signature Teams Rooms.
In addition, the Huddly Crew platform became audio enabled with the launch of Huddly C1 Crew. For the outlook, we continue our work towards becoming cash flow positive from the second half of 2026. I want to reiterate on our business plan priorities. Our focus continues to grow the strategic partner and channel revenue, maintain healthy gross margins while we exercise disciplined investment and cost controls. As mentioned, a key priority has been to enable our strategic partners.
This requires that all details are in place from technical integrations, logistics, supply chain certifications, and so on. This enables our partners to successfully execute their go to market and to start ship to end customers around the world. We signed a strategic partnership with Lenovo and announced that Lenovo will take all Huddly products together with the ThinkSmart Core directly to the market.
As part of this, Lenovo has ramped up and expanded their go-to-market activities. In addition to regions already covered in 2025, APAC region was added in Q1, with roadshows in Singapore, Tokyo, and Sydney. More activities are planned in Q2 and throughout the year. Jabra showcased for the first time the Room for More product offering. Our Huddly cameras play an important role in the portfolio that spans from two-person huddle spaces to large 22-person rooms.
Jabra has throughout the quarter driven go-to-market campaigns and roadshows in preparation for their first end customer shipments, also in Q2. Together with Barco, we could proudly announce a Microsoft certification for the ClickShare Hub and Huddly C1. The joint offering is, as of Q2, available through Barco and Huddly's distribution and channel partners. Microsoft is a leading collaboration platform and are thought leaders in our industry when it comes to meetings.
For many organizations, the boardrooms are the most high-stake rooms, and we are therefore extremely proud that our AI native Huddly Crew is the first recommended solution in Microsoft newly introduced standards for Signature Teams Rooms. When it comes to our product roadmap, we are on track towards our goal to offer a complete modular platform for any room scenario.
The latest product development is that the AI native Huddly Crew platform is now audio enabled with the launch of Huddly C1 Crew. This offering allows our customers to deploy Huddly Crew, including video and audio. That is not it, though. For our customers, the software upgradeable Huddly Crew is an evolving AI native platform. This allows our customers to future-proof their spaces in a very rapid moving AI environment. With that, I give the word over to Abhi. Thank you.
Thank you very much. I will now continue the presentation with financials, risks, and outlook. Let me first start off with risks. In Q1 2026, we experienced a significant depreciation of the U.S. dollar versus the Norwegian krone. Huddly report revenue in NOK, and our revenue is denominated in U.S. dollar, and hence this depreciation has a negative effect on our reported revenue. The decline is mainly due to the geopolitical situation that we are currently experiencing. Second, we also experience a significant increase on DRAM costs, as explained in the previous quarterly announcement. We have set in place several measures to address this situation. Number one, we have increased prices in channel with effect from April this year.
We increased the prices between 5%-10% for selected products, and this partially offsets the depreciation of the U.S. dollar and the DRAM cost increase. Second, we have a natural hedge in our financials due to the fact that we denominate revenue in U.S. dollar, but also our cost of goods sold is denominated in U.S. dollar. This provides a natural hedge against currency fluctuations. Third, we are working on alternative sourcing options and streamline operations to address the DRAM cost increase. We continue to manage risks in a proactive way to protect gross margin and to continue to support future growth of the company. Summarizing everything we have discussed so far in this presentation and translating that into a business case and outlook. We believe in the market.
We believe it's strong and growing, going forward. We have a product leadership position with our AI-enabled camera solutions. Finally, we have a strong go-to-market with key partners. We maintain our outlook of cash flow positive in second half of 2026, and the revenue in 2026 between NOK 450 million-NOK 550 million and gross margin of approximately 45%. Let's turn over to financials and dig further into the details. Revenue in Q1 2026 was NOK 48 million. That is an increase on a year-on-year basis, driven by the strong increase in strategic partner revenue. Channel revenue in Q1 was disappointing and was reduced by 24% compared to Q1 2025. This reflects mainly elevated distribution stock levels during the second half of 2026 and delayed investment decisions in the North American market.
However, we do not see the same situation in Europe. As explained earlier in this presentation, Huddly reports in NOK, while revenue is denominated in U.S. dollar. In Q1, the U.S. dollar depreciated, and that had done a negative impact of approximately NOK 7 million if you look at the U.S. dollar currency in Q1 2025. However, revenue is expected to increase significantly over the coming quarters, with a gradual rollout of new strategic partner offerings and onboarding of them and finally, customer shipments to end customers. Gross margin in Q1 2026 was 47%. That is an improvement from 44% in the previous quarter. Q1 benefited from a favorable customer and product mix, and we also did not have any significant one-off items that impacted the gross margin for the period.
For reference, the target for gross margin in 2026 is 45%. With 47% in Q1, we are well on track to deliver on that expectation. Let me summarize the P&L. We do see a year-over-year reduction in losses. Revenue increased year-on-year, but also OpEx reduced on a year-on-year basis. That is both because of cost savings, but also due to the fact that we had a one-off item related to share-based non-cash cost items in Q1 2025, which was recognized in that period. Consequently, in Q1 2026, we demonstrate a year-on-year reduction on losses. We at Huddly, we continue to invest in the future. Capitalized R&D in Q1 2026 was approximately NOK 18 million , which is according to expectations.
We have a strong product development organization of 57 engineers, with roughly 45 working with AI, machine learning, and software development. This organization is key to deliver on our product roadmap and to enable future growth. Ongoing investments is aimed at maintaining Huddly's technological leadership and is key in supporting future revenue growth. Let me wrap up the financial part of the presentation with the cash flow. Cash end of Q1 was NOK 110 million , and in the period, we raised a capital of NOK 75 million in a private placement. In addition to that, we also raised additional NOK 11 million in a subsequent repair offering. However, this number is not included in the Q1 numbers because we received the payment in April 2026.
Operational cash flow was - NOK 1 million in Q1 2026, which is an improvement in comparison to the - NOK 20 million in same quarter last year. Finally, I'd like to note that the cash balance in this cash flow statement excludes restricted cash related to office premises, valued at approximately NOK 11 million. This is a restatement, which was also included in the annual report, which was published one week ago. We will continue to report the cash balance excluding the office deposit. That concludes the presentation of this quarterly announcement, and we will now turn over to a Q&A session where we will welcome questions from the audience.
Now, Jon Øyvind Eriksen, our Chair of the Board, has joined us for the Q&A session. Welcome, Jon Øyvind.
Thank you. Great to be here.
Thank you. We will just jump right into it. We have already received some questions. To the first one, what are you doing to increase channel partner sales? Even though we do expect the majority of the growth going forward to come from our strategic partner, the channel partnerships and the channel revenue continues to be an important part of our business model. As we presented, I think it was in Q3 or in our Q4 reporting, we explained that we were expanding our presence in the Asia-Pac region.
This would diversify against regions or the regions between Americas, EMEA and APAC. We continue to work very closely with our partners in addition, of course, in EMEA and Americas region going forward. It's the next question. Both of your revenues and significant part of costs are in U.S. dollars. What is your year-on-year growth rate in U.S. dollars? Abhi, this sounds a question for you.
That is a very relevant question given that we see that there's a depreciation in Q1 2026 versus Q1 2025. If you adjust for that depreciation and assume that the U.S. dollar to NOK currency would have been the same in Q1 2026 as in Q1 2025. The revenue in Q1 2026 would have been NOK 7 million higher, which is then equaling to about 22% year-on-year growth, rather than 7% year-on-year growth, which is what we have reported in the NOK currency.
There's a question about what I will translate. This is in Norwegian. I will translate it at best ability to English. What's concretely behind the expression significant increase? Is it POs, indications from partners or other? Maybe I can explain a bit how we do estimate our revenue model. There is a difference between, first, the strategic partners and the channel sales. Whilst the channel sales is more kinda built to stock and then to order, our strategic partner sales is more to built to order. Meaning that on the strategic partner sides, we have longer term, more longer insights into their forecasting and revenue expectations. However, also important to note that there are obviously varieties between our contracts of how far, but also kind of the actual commitments with regards to the commercial commitment behind those indications.
There's a difference between those two that we put into our estimations, which lies behind this expression. There's another question, very relevant question. What's the largest risk for that the ramp goes out? We tried to explain that in the slide where, again, we have mentioned that we expect the largest revenue growth coming from our strategic partners going forward in 2026. What we explained in that slide, the, I think it was the slide number three, after our business plan priorities, we explained the kind of the stages in the strategic partner ramp-up.
Delays in getting them ready to ship the first customer for the end customers, but also, kind of delays in the go-to market or if it is a slowdown in the ramp-up, estimated ramp-up curve is kind of the largest risk on that. It's the speed of that ramp-up curve that we are very focused on at the moment. Then there is a long question, which I'm gonna take one minute to read and then try to shorten it. It goes about how confident are we that we will be able to achieve our growth targets with relation to the estimates we have presented. Maybe, Abhi, you can explain a bit about that.
We maintain the growth ambitions for 2026 with revenue of between NOK 450 million-NOK 550 million and cash flow positive in the second half of 2026, and a gross margin of approximately 45%.
Yes, I'm just gonna give it one to see. There are no more further questions. With that, I thank you for all joining us in this Q&A. If there might be any additional questions, please do not hesitate to reach out to us at ir@huddly.com. Thank you.