Okay.
Good morning. My name is Birgerstein, and, last December, I was elected chair of Nordic Semiconductor. I wanted to take this opportunity to introduce myself to you and to introduce some work that we've been doing between the board and management since then. First of all, I've also had the opportunity to spend quite a bit more time with the company. I've been with the on the board since, the spring of 2017.
With the last, 6 weeks, I've spent time both in Uulu in Finland, which is an impressive place in many ways. Trondheim and Oslo and also had the opportunity to spend the week with the Nordic team in Las Vegas. And that's that's going to rank high on my, highlights of 2019 personally because these guys are like rock stars on that floor. If you're from Nordic, you're welcome absolutely everywhere, and everybody comes by or stands. So I see a few faces who were also there, and they can probably testify to this.
But, one in particular, since I joined the board back in 2017 and in particular, these last 6 weeks, It's become clear to me that many of our shareholders have opinions on our investor relations work. We have more than 3000 shareholders, so that's probably natural. It's now surprised that you guys have different perspectives and different needs. Anyway, in phone calls, and meetings and with the help of some qualified third parties, we spent some time listening and taking notes in this last, at least last few weeks. Let me step down as board and management to think through how we could serve you in a better way.
The net result of this is our revised Investor Relations policy, which you will shortly find on our website. You'll see a key theme is our ambition to provide all shareholders with equal and timely access to share price relevant and fact based information. We aim to produce a generally tighter information flow, timely, accessible and widely shared. We will focus on announcements, press releases, capital market days and roadshows on both sides of the Atlantic as we reenergize our marketing efforts to international semiconductor investors. We made some changes to our forward looking guidance principles effective today, as you'll see in a moment, with an emphasis on key figures for the current quarter, and medium term revenue growth aspirations.
We're doing this to align with market practice. But also in light of high uncertainty and low visibility in our markets. And by the way, this is a situation we do not anticipate will change in the foreseeable future. If you look across comparable companies internationally and now just most recently, probably the company with the best insight in the whole world and to the world economy, Amazon, you'll find a similar approach to forward guiding. We're also rebuilding our investor relations team with top notch people, and Svenn Tore will provide more detail on this in a moment.
And that's really it in a nutshell, you can read more about the details on our website shortly. In my opinion, Nordic Semiconductor has a strong platform for future profitable growth, and I hope to contribute to the company's development in my role as board chair. Going forward, though, I hope the board of the company will be less visible rather than more and less of a factor in investor relations work than it has been in the recent past. This company has products, customers and full time employed people who really speak for themselves. So in that spirit, I'll leave the stage to our CEO, Svenn Toreen Varshan, will present the 4th quarter results, as usual, together with CFO, Polesto.
Thank you.
So we do the, as usual, I'll do the business update for all of the financials, and I come back and do the business outlook. Q4 highlights, there was a we continue to strengthen our market position in Bluetooth low energy. But maybe the most important thing is, yes, we get 100 and 33 new designs in Q4. The sign in regulation, but the difference from previously is that we also have high ranked tier 1 customers among this with opportunity to hire volume going forward. We had a successful production launch of our cellular IoT product And we received industry awards for the 2nd year, we won the GSA award Global Semiconductor Association is association of all semiconductor companies that are voting for their favorite within the different categories.
And we won the European category this year as last year. If you look at numbers, we saw a solid proprietary revenue, and that was mainly due to accelerated shipments out of China prior to the new tariffs. So we saw some of our customer produced and want to ship it out ahead of tariffs into the U. S. Challenging market in China due to these expected trade tensions and we got a disappointed revenue compared to what I mean, we are not happy with $61,100,000, but it was a tough situation for all semiconductor companies during Q4 18.
So as I said, 61,100,000 It's a decrease of 5%, again, far away from our target when we enter into this year. It's, as I said, impacted by trade tensions and following low demand in China. When people are getting cautious and we have lines of cautious nets it really affects the 1st supplier and that's Nordic as related to over market. Proparatory was only down 4%. When we started the year, we expected a decline of 5% to 10%.
It's been keeping up, which is a positive sign for one of the bricks in our revenue. And we did promised revenue for our cellular modems. And so we delivered, we got $2.32 k invoiced during the quarter. Our backlog is solid going out of Q4. It's up 30.4% year on year.
What we've seen though is that some of these revenue has been pushed into Q2. That's why we are cautious when we do guiding for Q1 2019. I'm not talking about all the decline, but if you look We had a growth of 23.3 percent year on year in Bluetooth. So we continue to grow. And that's more or less what we will call, at least we aim for having also asked over short medium term goal of growth in Bluetooth.
The bright spot is that we started to get paid for our efforts on supply chain and we got a gross margin of 51%. It's up 3.4% year on year. We had an EBITDA of 2.1. And if you look at short range EBITDA, It was EUR 7,000,000 or 11.5 percent EBITDA margin. It costs to the investment we're doing in Finland, but it's going to pay back.
If you look at our product life cycle, and this is in short range. You will see the steep rise of Bluetooth. While we just want to talk a little bit about the time we took from our first release of a Bluetooth ship till we got revenue. It was 5 to 6 quarters. When did we release the cellular IoT product?
12th December, and we got the revenue in the same quarter. It really tells that the statement I made on the first slide that we are a recognized semiconductor vendor really also spread outside competitors is customer that buying our product and that buy it the same quarter as we release the product. Actually, when it comes to the seller modems, we shipped 360 development kit before we release the official production and we are because we now see Tier 1 customer are entering the market with products with Nordic inside. So we will expect growth between 20% 30% going forward. And we said last year that we think there will be a decline in Proprietary of around 10% We've been a little bit more modest this year, and we say maybe 10 to flat.
So the basis and for Nordic to grow has never been stronger than today. If you see here, the life cycle here is on 2 products. We're going to add another product on top of these 2. And if you look at that product, it has an ASP that is 10 to 15 times the existing Bluetooth ASP. So by this, I leave it over to Paul.
Thank you, Santura. I'll now run through the financials. For Nordic in Q4. As normal, these numbers are the reported numbers. They exclude, capitalization of intangibles of equity compensation, which will come back later when we talk about the cash OpEx.
As we see, we had the disappointing revenue in Q1, Q4, sorry, with minus 5% versus last year. Of course, as we've communicated earlier, our fixed cost base continues to increase. So we will get a negative effect of our pricing leverage in this this quarter, which will I'll go run through more in detail, more. However, as Santura just mentioned, we do see positive effects on our variable cost base. Our variable costs, the gross margin has improved significantly compared to last year.
We had the 3.4 percentage point increase from the same period percent of revenue, up from 41.3 percent a year ago. However, compared to Q3, which is the highest revenue The increase from Q3 is of course lower revenue. However, we also have as normal a higher activity in Q4 versus Q3, both in in relation to activity in sales, in activity in exhibitions, but also the effect of holiday pay in the third quarter of the year. The underlying or the reported number in cost has gone from to 29,000,000 in 2018. A few comments I'd like to make.
One of the biggest cost increases have happened in cellular IoT business. The reported number for cellular IoT is, $5,000,000. This has increased to, to, without capitalization to $7,450,000, up from 6,100,000 a year ago. Also, SG and A SG and A has gone from 1,000,000 a year ago to 1,000,000 this year. The investment in SG And A comes as an effect of the focus we have on introducing the cellular product into the markets that will happen in 2019.
On the EBITDA margin, 3.4% versus 6.2% a year ago. As, our cost base is fixed, of course, we get a negative effect as I mentioned on when the revenue goes down. So I also want to highlight 2018 full year operating model performance. We did have a 15% growth in, in revenue this year, including a Bluetooth growth of 23.3%. So with which is within our medium term, ambitions.
However, as I also said before, gross margins a very good improvement, in the beginning of 2018, we said that we were going to have 1 quarter of above 50%. When you look at the year as a pool, we actually almost managed to get 50% for the year as a total. So we're very happy with the development within our cost base on collection. Total OpEx at 38 percent versus 37% for 2017. OpEx going from $87,000,000 to $103,000,000.
Also, higher OpEx, our revenue growth combined with improved, gross margins have driven an EBITDA margin improvement of 1% from 10% in 2017 to 11% in 2018. I'm now going to briefly go through the revenue per market, of course, when we have a 5% decline in revenue year over year and a 22% decline quarter over quarter, it will be negative in most areas. 1st of all, consumer electronics and variables is the two markets that are most impacted by the trade tensions that Santula mentioned and the low demand in China. The reason for this is that within consumer electronics and wearables, it's where most of our customers are ODMs, in China, which see the lower demand. Two areas with very positive development is health care and others, Healthcare is, one of our key target markets in 2017 that was, slightly loaded to new products released, but in 2018, we've seen a very good drive on these new products.
In others is the module business that also has shown very strong numbers throughout the year. Building retail, of course, the, the worst area with a 37% decline. However, if you adjust for the two applications we discussed in the Q3 presentation, building and retail shows a pretty good growth rate. For the next 2019, we will, of course, add, our cellular IoT products into these market categories. Gross margin, we had a strong gross margin expansion of 3.4% versus last year.
This comes as an effect of the continuous improvements on costs and yield on products. Actually, we now see the highest gross margin since, Q1 2015 Q11 2015. It's really when we released NRF 52. And we started to have lower yields, but all that is now improved during this time frame. Compared to last quarter, we have a 0.2 percentage points improvement.
Driven by underlying cost improvements again, but also, favorable impact of ASIC revenues, which have a good gross margin and volume bonuses received in Q4. It's also important to highlight that we do have quarter to quarter fluctuations and they should be anticipated also in 2019. I'll now turn to cash OpEx. Cash OpEx is what we have as an underlying cash, cost. Where we exclude the effects of capitalization.
In Q4, we have capitalized the 3,000,000 dollars, of which $2,500,000 relates to the, cellular IoT investment. So the reason the highest amount is there is of course that's the product that's running into the commercialization phase. And whilst in Bluetooth, we have more products further down the pipeline. As previously communicated, or, cash OpEx has been increasing. However, from last year, the increase is now 10%, which is slightly lower than we've seen in historical quarters.
This increase in cash costs comes mainly an effect of higher headcounts, we have increased headcount by 14% from 601 last year to 685 this year. This increase comes as broad, basis, both in R And D, maybe cellular IoT, but also in the sales and supply chain to fuel the futures growth. We do target to have a continuing cost discipline during the quarters Cash OpEx should follow the operating model that we've discussed earlier. This this list is a slide we introduced last quarter. Where we'd like to focus and show the profitability of our source range business.
Our short range business, which is the Bluetooth and the proprietary, including the ASIC, actually showed a strong 15% growth. Year over year in this growth business, coupled with, improved gross margins. We have been able to improve our underlying EBITDA by 10% from $43,000,000 a year ago. To 47 or close to $48,000,000 in 20 18. Due to the higher cost base, the EBITDA margin is slightly down from 18.4to17.6.
However, we are happy that we're able to keep the relatively high EBITDA margins in the short range business. My final slide is on cash flow. We did have a very strong cash conversion in the quarter. That the total cash flow was a positive $9,000,000. However, if you look at the underlying operational cash flow, This was $26,500,000.
The strong cash flow is a seasonal effect. We always see improvements in cash flow during Q4. However, this was stronger than we've seen in previous period. The main reason for this is that we've been able to reduce our net working capital substantially from 32.1 percent of last 12 months' revenue to 22.6 percent this quarter. So we continuously have a focus on reducing our internal inventory and also keeping good control of our customers.
In addition, we had a CapEx of $5,400,000 in Q4. As we mentioned earlier during the capital, increase in April, We are investing in pest equipment to speed up the certification process and also yield, analyzing yield, etcetera, for new products coming into the market. This is very important when we're selling to the more complex customers we're doing today. We have purchased, treasury shares for $12,100,000, this quarter, 2,800,000 shares. And when we did raise capital in in April, we we sort of announced that the user proceeds of this share capital increase was threefold.
First of all, it was to invest in working capital when we will start and commence our cellular business. Secondly, we will invest in lab equipment to, to speed up the testing processes. And finally, we do want to show a strong balance sheet to our Tier 1 customers. In light of this, we've decided to to stick to this use of proceeds that we announced and we've terminated the share buy program, as of today. For the year, as a total, we have a breakeven cash flow adjusting for the financing activities we did in the second quarter there.
Santura, I'm now gonna let you do the business outlook.
So We've been announcing a couple of design wins on cellular modem earlier. But this time, we add a new product. It's a beverage machine, the slush machine And I designed the 91 parts in there to do maintenance and reactive maintenance. And during CS this year, we got a lot of customers doing the same. We got the guys are that all the popcorn machines around the U.
S, we have guys doing soft ice around the U. S. Want to implement something similar. So we see high activity in a segment that we actually predicted a year ago, and this talked about active main months. We also see that we continue to win smart tags for asset tracking.
Healthcare Life monitors, again, new wins. In the middle, you see product from ABB is a is a bearing and they have a sensor and a Bluetooth low energy communicating with the hub. You're going to see quite a bit of these sensors collecting information from industry applications going forward. The sales team, I've also worked with a couple of companies doing electronic shelf labels. This space has mainly been driven by IR infrared light.
Now we see companies moving to Bluetooth low energy. Good volume opportunities. We have this chart from an analyst showing that Nordic is back on track and close to the 45 percent market share on the design wins that are registered at be at Bluetooth City. It's exciting to see us back where we belong as the leader. Absolutely there.
But I think another thing to look here and the comment we got in Q3 is this red bar with others And these others contain around 2022 different semiconductor companies that have 1, 2, 3 design each. Usually they are in the low end BLE products. But you see, these guys had a relatively sharp decline in Q4. And we don't think you can maintain the specification put all the functions and features that are required for Bluetooth low energy with 1 to 2 designs. It requires more revenue And I think this chart shows that Nordic is there.
8% year on year, 10% growth quarter on quarter. We also believe that shipping kits the right way to get attention with customers. Easy to use kit, we are showed on the demo on the 12th how easy it is to get our cellular IoT kit up branding. And everybody that's been working with Nordic now how easy it is to get the ability to run it. But we ship close to 66,000 kits last year.
It's a 33% growth for the second half, 39% growth for the full year. It shows that the market for BLE is growing and it also showed that our position is strong in this growing market. So key achievements we proud of We're also proud of how we keep up with development in BLE and Bluetooth SIG. Bluetooth 5.1, which is the latest specification of Bluetooth, contain something called Direction Finding. Nordic has implemented directional funding from overship, which is called 52811, and it will be on all subsequent devices out of Nordic.
We do have some exciting applications already today with all the parts where we have proprietary, direction findings, which I will come back to on a later stage. So we to be able to lead in a technology sector you need to ensure that you have the new additional feature timely out to the market. So our new segment, cellulariot It's going to be the next driver for Nordic and it won't take five to six quarters before we continue seeing revenue. If you look at the left side here, this is the 1st projections from external analysts, ABI Research. It's 2 weeks old.
It shows what I expect from the market from 2019 to 2023. If these numbers are it really shows that the statement we've given to the market that we should be break given in 2020 implies that we need to take That's not a traditional Nordic approach. We aim for more. 2020 is not that long out. If you look to 2023, we are close to 7 100,000,000 units that they expect to be shipping into the market.
And this is TAE, Narrowband IoT and M only. We're not talking about LTE generally. These are the 2 standards Nordic delivers. So another is guys here as a really sharp with the calculators. If you take close to 700,000,000 units and multiply by 10, 15, We can see that this market is significantly larger than the BLE market.
And if you then think we have a modem that is suited for most of these verticals that will apply narrowband IoT LTM. We have a market leading power consumption And we have a community of designers out there that are familiar with the Nordic development tools. I think it's important for you guys to understand When as a designer, you should start a project, you have extreme pressure on time to market If you can start in a development environment, very familiar, you can become the star of the company especially if you use the component that has the lowest public consumption and has the best specifications. We are extremely proud of particularly proud of how the sales organization, how our partners been rolling out the LTE shipment We are an exciting trip ahead of us. So I hear from people occasionally.
Nordic is not well known around the world. I would like to stop that here and now. This is one of the broad leading catalog distributor, shipping worldwide. One morning, Guy got this letter into his email, email box. It says it's levered congratulate us to the tremendous interest in our products.
9160, the cellular modem design kit, The product was ranked 2 and number 4 in views on the web page among 97,000 new parks that there has stocked the last 6 months. This is incredible good. And we are proud of that. But read further, we also had the 52, 840,000,000 up there. It was ranked number 5.
3 products for Nordic among the top 5 products. I'm proud and impressed. And so are David Stale, the vice president of global supply management at Ticheke. So still want to discuss that we are well known around the market. We got, award from the Global, GSA we get such kind of feedback from a leading distributor.
I'm sorry, I'm not accepting that Nordic is not well known in the market. We are known as the connectivity leader. We also see now that we have created a leading product that generate interest at engineering desk globally. With the 91 family And we had an impressive launch of the 9160. We now get certifications in place.
We got the global certification program, which covers more than 100 operators. We are working on 10 major operators lined up for network specific approval programs. Some of them will already be in place first half twenty nineteen. We are starting to ship development kits and samples through distributions. You know how how they were shipping LT and cellular modems before.
Our competitors had FIEs going out to customer sitting with them for weeks. Because it was so complex. Overfinish guys have made this ease of use, which is the Nordic mantra. Anyone that has a little bit of knowledge of electronics can hook these kids on the net. And I come back to that as a proof of that.
And another member when we launched a product, 12th December. Between 12th December 1st January, there is a holiday. Despite that holiday, we shipped 2000 development kits out of Nordic. And customers are now building prototype across a range of verticals. It's not only Schlash machines.
It's not only popcorn machines. It's absolutely other areas too. I don't know who saw this was released yesterday. Nordic facilitates Telenor LTE Deployment. It's Uwe Fredheim, Head of Telenor Business.
He says in the press release, Nordics dual mode LTE Technology. Fits perfectly with new networks. What did you say? I used the word easy. Ease of use.
What does Telenor say? Making it easy for more people to take use of IoT on 4g. The operators really need IoT to sort of take off and they have the vehicle to do it. They are going to sell the 9160 development kit. In their own web shop.
Crystal can buy 1, Finula can buy 1, and you can put some power supply on and suddenly you are connected to the cloud. Before we go there actually, there was what's happening? So, there was also another major operator out with a press release yesterday. Nordic will mention as one of the partners. So Telenor is not the only one.
So it's significant movement in the space. And Nordic is dependent that operators are putting 4G and 5G and Narrowband IoT on the base station. And this happens as we speak. So Now, I'm over to guidance. I've been talking a lot about good things going to happen in Nordic.
And I'm showing a not very good guidance on the numbers for next quarter. This is very much in line with what you see from other semiconductor companies that have been guiding for the first quarter. We think we are ahead of an uncertain quarter and we are expressing this through our guidance on the revenue. But this is a temporary thing. We don't know if it's going to be Q2, Q3 or whenever we're going to see this tension or If it's going to get relaxed tomorrow, nobody knows.
And that's why we are cautious in our first quarter. Guidance, but be sure that we have projects to drive excellent revenue in time to come. We are continuing focusing on cost improvements. So we expect to keep the 50% margin We, as Paul said, raised capital to invest in lab equipment, two reasons: one is to comply to Tier 1 customer's requirement. As you're getting more of the Tier 1 customers, you need to fulfill their expectations, and Nordic is doing that.
We also want to accelerate the our process to get approved for networks. So we have bought The same test equipment that operators use when they test Nordic against their own network. We don't want any surprises when our modules get into our operators test labs. Did obviously cost, and we expect a CapEx of around 1,000,000 in Q1. And we do it because we expect to see a result of this, not only in margin improvement, but in revenue in quarters to come after the Q1 quarter.
A final comment I will make is that next quarter, we'll then meet our new Director of IR. Store Lateral, we'll move back from Hong Kong and participate in Q1, presentations and roadshow. For those that there is some few ones, maybe not in Norway, that we meet him actually on the roadshow. We have next week. So he will be active from now and we'll be leading part of the presentation in Q1.
Then we open for questions.
Christopher here from DNB Markets. I was just wondering if you could start with, I guess, you don't know what will happen in Q2 and Q3, but could you share some thoughts on what will need to happen for this situation to normalize? What are your clients telling you? That they need to see before this will normalize the situation?
There is 2 thing related, we have to take it related to Nordic. One thing that's for sure is that we will get new customer. So even if the situation is not normalizing, we will grow our revenue because this customer will get into volume production in the second half. If we get a situation where the trade tension basically disappear, we will get a double because then we will get existing Chinese customers back on track. We have accumulated quite a bit of design wins, as you know, and I will move to production.
Yes. But I guess even though there are these trade tensions, we still need the same amount of wearables or keyboards and mice, stuff like that. So how long will kind of the end customers, the Western companies that use these manufacturers in Asia? Long are you able to wait before you have to move production out of China or do other initiatives that faces the problem?
I think that's very individual of the power of each customer. We see some of the leading customers are exploring opportune this in company in countries like Thailand or Vietnam, but that's nothing that Nordic can comment on or have an opinion we can just watch and convey overview.
2 more. The first one, you take down the the long term or medium term target for Bluetooth growth from around 30% to 40% to 20% to 30%. Could you just share some thoughts on what's the main driver behind that significant lower growth? And then secondly, on medium term gross margin and capital targets, is this a temporary higher CapEx and the gross margin, is it long, medium term, 50%?
I'll take the first part of your question and Paul can take the second. The first part is basically that we said this is a mid term, medium term target And that's because we have the tensions ahead of us. Would like to comment when situation change, but we can't comment before we see real proof of changes. But we think in the 20 to 30 percent, we are in a range where we able to fulfill that guidance.
With the tensions still going on?
Not for Q1, for Q1, basically, but we submit term. If we had that in Q1, the number of guidance wouldn't be 50 to 55. But we have to lift overview about Q1. Q1 is unfortunately what it looks to be, but it will not continue in the same pace as we add on new design wins and there will still be production of products that will still be consumed of products globally. It doesn't stop
For gross margins, I think we've communicated previously that our long term target there is 50% on on the short range business. It's important to remember the short range business. On the cellular business, which is where we sell a system in packages, modules, our target is still, for around 40 plus, percentage gross margins. So then you'll have to calculate the corporate average when we start looking into the the the the the seller IoT numbers. On CapEx, we do have a higher CapEx in Q1.
I don't want to communicate further than that because of course, CapEx really depends on on on plans and targets and what we want to do and how the whole business develops. So that's the target for Q1, and then we'll see what happens for the rest of the year. But look at historical numbers and you can get into that
just at market conditions.
Yes, Aksel from from ABG. So, couple of questions. Firstly, you have a backlog of $70,000,000 ending the quarter. It is up over 30% year on year. And it paints a little bit different picture than the revenue, which is down.
So could you comment a little bit on the backlog, sort of the duration on the backlog?
Thank you for your question. I mean, that's a very good question. And that shows where it shows the situation. Basically, yes, we have had orders. What you see is that orders are pushed out in time.
The good thing is that they're still on the backlog.
And and just follow-up, criteria because I discussed with my colleague, earlier, and and we wondered how long can an order be in the backlog before it's taken out of the backlog
an order is never taken out of the backlog before it's canceled by the customer. And I don't have a metric number of how long that time is.
Yeah. And if you could comment on sort of the duration on the backlog, how long, does it stretch out in time for?
Yeah. The, I think the length of nature of part of our backlog is ending in Q2. So basically not longer than Q2.
And a question relating to the gross margin improvement, which has been very strong. So you cite a couple of different reasons, but would you say that it's primarily driven by supply chain improvements or primarily driven by favorable, customer and product mix? Which is the key factor?
Or is it I think basically, supply chain has contributed mostly to this. The exact split I have not calculated on but obviously it's supply chain and improvement and investment we've done based on the capital. We raised earlier this year.
And when one has seen the gross margin improvement, and we're not seeing that in relation to the sort of unsatisfactory Bluetooth growth and perhaps a little bit stronger proprietary sales. Some are the reason that you have stronger margins on the proprietary side. And that has been sort of a key driver for the high gross margin. Is that correct reasoning?
No. I
think our gross margin is a little bit mixed. It's difficult to exact pinpoints if proprietor is better than Bluetooth.
And, a couple of final ones. So you saw headcount growth now in 2018 of 14% and you continue to to hire many new people. Do you expect sort of a similar growth rate in terms of staff for 2019?
We have plan for growing support, especially for cellular modems and sales and, but it will not be in the same range, but also depend on market conditions. The important thing for us is that there is a limited pool of available really good And if we can get capacities that can lift the total organization, we will always employ these guys.
And a quick final one, more short term oriented So on Q1 now, I would guess that it is a quite difficult quarter to guide on. Given that you do a lot of business in the end of the quarter. And in this quarter, you have the Chinese New Year also. Yeah. Could you say a little bit about sort of visibility that you have on the quarterly development so far?
And how much of the quarterly business is going to be done in March? And how that could sort of change your outlook better or worse?
I think the visibility is more or less the same cities other quarters. So we do a lot of the business towards the end of the quarter. It doesn't really matter that there's 1 week of holiday. In between.
Thank you. Last day in Arctic. Can we quantify how much of the year, weaker sales was due to weaker end demand? And how much was due to cut in inventories from your distributors approximately? And because dialogue they claims that the underlying Bluetooth market growth is about 20% also growing into Q4.
And that's just an inventory is by that distributors is a problem given more?
Yes, we can comment a bit. Obviously, there is, inventory adjustment when you see such a disappointing guidance for Q1. And, while we also see that there is some new project coming in that will use different products from Nordic. So it means that the inventory situation needs to be dealt with, and that's what we're doing but the exact ratio on over products is hard for us to know because it's our end customer. That's it without information.
And I, yes, Q4 specific on the Building And Retail segment, if you exclude share buyback and how much approximately this revenue year over year?
We haven't given that details. It's but we say that underlying, we see good momentum in that business. And we've all talked about Smart Homes, retail solutions, also the city banks in other areas than in Asia has a positive momentum. So overall, Building Retail is an important market for Nordic.
We see a new segment within Building Retail starting and that is lighting smart lightening, which will contribute a bit in Q4. We'll continue to contribute in quarters ahead of us.
And on CapEx, can I give some more color on the mix on what you expect to be invested in Finland this year and what you expect to be invested in Blue too soon how we should think about the CapEx number for the next few quarters?
So I think what we invest is most of it is a lot of it is combined. So we're not buying a lot of equipment just for the long range. Most of it can be used for both long range and and short range. So it's a good mix there.
I think we have to make a little bit more variance. Basically, all the component tester, we use the same test equipment. When it comes to network tester, it's specific for cellular IoT. And we've done most of the network test equipment already.
Thank you.
Andreas Bertis from Kepler Cheuvreux. Two questions here for me. First of all, you mentioned the sort of a pull in effect on proprietary. Can we see a reversal of this going into Q1 in the in the guidance?
We didn't see the pull in request ahead of Q4. And I think we are very much in the same situation. If there is a push out for Q1. We haven't seen that either. But we have inventory.
We are prepared for a continuation of this if this happens.
Okay. And secondly, on this machine popcorn machine type segment, surprised to see that the economics can work out in terms of how much it would save on predictive maintenance versus the cost of the module and the subscription. Do you know any, do you have any color on how these economics work, if you can really justify this type of chip with subscription on such a sort of small device?
Yes. Usually these machines are maintained by persons going over there. And sort of shaking. And having some people employed to go around and shake these machines is relatively costly. So the companies that we met said they will save significant over time.
Okay. Thanks.
Your time is over. Thank you.
Have a good day.