All right, good morning, everyone. Particularly everyone joining live. The crowd is getting bigger from each quarter. This time as well, we have a record volume joining online as well. That's a good sign. Before we start, I would just like to give my appreciation to our investors, our shareholders. A lot of you guys have been here since our IPO and follow us through this journey. For the management, for the whole Xplora team, now also for the Doro team joining online, it's always very special for us when we can be on stage and tell you how we have performed. Today, we have to say we are especially proud and we look forward to give you the numbers and the insight as well. Today, your usual suspects, myself, Knut, and Kjetil will take you through all the numbers.
We'll do that in almost the same format as we have had before. I will give you some of this quarter's highlights and the first half-year highlights. Then Knut, of course, will go into all the financial details. I'm also happy to announce, we did announce it already, that Kjetil has onboarded a role currently as CEO at Doro. He will use this opportunity to give you a market and performance update, first explaining about the Doro progress and then our group number all combined. We do have a slightly extended post-quarter event simply because so many things are happening. Even after we close the quarter, quite a lot of action has been going on. We will extend that a little bit with a couple of extra slides. Since also we have had quite a lot of deliveries, we have a slightly tuned outlook as well.
Quite a compelling agenda today. Before I give you the high-level number for this first half-year, I just wanted to pinpoint three quite important drivers for the numbers. As you saw when we published early this morning, we have a very strong number down on our EBITDA level and a couple of key inputs to really understand the numbers before we present them to you. If you recall back in Q1, we said on our radar, it was very important for us to make sure that Q2 really had a good sell-in and, of course, also a sell-out. The team, both on sales and marketing, has really worked hard. We have a very strong watch activation number. On top of that, we also have in our core business, so the Kids, we have a very high and strong conversion rate.
The number of activated watches with the conversion of how many SIM cards we are activating, our key number, in fact, is also very, very high. 207,000 watches activated, 37% of our last 12-month watches are being activated with a SIM. That's a very important driver for this first half-year. We also have up six percentage points our gross margin, and it's primarily driven of two elements. One is that we have successfully introduced new product SKU with improved margin. Our finance team and the market in general have also worked in our favor regarding currency. That's also an important element, but in particular also our new products with higher margin. I know some of you do not appreciate or like the term of revised EBITDA or anything except just EBITDA.
We have a reported EBITDA, but included in that, there is almost NOK 20 million the first half-year of one-off related to the acquisition or indirectly cost related to the acquisition. Our reported EBITDA is NOK 69 million for this first half-year, a very solid and strong number. Highlight the number is then as shown on the screen. Our group revenue up 160% to more than NOK 800 million. If you all recall, it's not that long ago when we reported a full year, that was more or less our total revenue for the full year. Now we have the first half, and it's just north of NOK 800 million. Our recurring revenue is up 26% to NOK 161 million. When we ended Q2, we had 393,000 subscriptions, all bringing in a gross profit of NOK 422 million, up 165%.
As I just said, we had a reported EBITDA of NOK 69 million, which is up +NOK 47 million. We have still a very strong cash balance of NOK 530 million . Of course, Knut will really tap into the details of these numbers in a second. We also would like to be very transparent going forward with just a key summary. This is for last quarter Q2, just what we see as our strength, but also what we really see will be on our radar. Things that might be difficult or challenging, we'll be very transparent and just give you this slide every single quarter. On the strength side, we would really like to emphasize what we said last time that it was on our radar. We really need to recover the sell-in and also the sell-out, which we really did in Q2, hence the good numbers.
We also had three very important launches in Q2. On the Doro side, on the Senior side, we launched a new Aurora product. Kjetil will come back to that later. Within both Youth and Senior at the very end of the quarter, we also launched our new SIM services. From this second half of the year, we can really start to accelerate the rollout of these SIMs on Youth and Senior. Kjetil will come back to those details. For everyone that has really been following us for a long time, when you start to model your results based on the new input today, as you will see, a very strong financial improvement and scale in our core business from Xplora related to our subscription number, our margin, and our conversion rate.
I will give some samples on that at the end as well. There is really now one big thing on our radar for Q3 and Q4, and that is to make sure that we are able to execute in a good way the implementation of what we now have launched, Doro and Youth, with our SIM services. Kjetil will provide the timeline, and we can jointly, I assume, throughout today, discuss a little bit about both expectations and how we foresee this as we have recently just launched. With that, Knut, please take us through some details.
Thank you very much, Sten. Good morning, everyone. Sten has already shown the very most important numbers for the first half of this year. The slide here shows the reported figures. I will come back to a pro forma set of figures in the next slide. As you can see here, we have a 160% increase year-over-year for the first half in the revenue numbers. The gross profit is increasing 165% year-over-year. The EBITDA is then going from NOK 21 million a year ago to NOK 69 million for the first half of 2025. That's 220% up. Of course, as Sten said, included in the first half number, it's NOK 19 million one-offs. NOK 11 million came in Q1 and NOK 8 million in Q2. We are reporting the EBITDA as it is without any adjustment and so on.
These NOK 19 million, I will come a little bit back to what they are in the coming slides. If we look at the Q2 number, we have also a very strong revenue growth, 143% from NOK 190 million in revenue to NOK 463 million. Gross profit is also up. The percentage change is even higher than for the revenue. For the EBITDA, we are going from NOK 18 million a year ago to NOK 51 million in this quarter. It is not only the addition of Doro that gives us this performance and this increase, but also if you compare it with the pro forma numbers, we also see an increase on all these metrics. For the first half of 2025, we have a 12% increase in the revenue, a 26% increase in the gross profit.
As Sten said, we have a 6 percentage point increase in the gross margin. The last, maybe the most important number on this, we are even going from an EBITDA of NOK 54 million in the pro forma numbers to NOK 69 million for the first half. The majority of the numbers are added in Q2, where we have NOK 463 million in revenue. If you do the pro forma numbers, then you get to NOK 398 million, a 16% increase year-over-year. Gross profit, a 25% increase from NOK 185 million to NOK 231 million. Also, the gross margin goes up in the quarter with 4 percentage points. The last number here, we are now in Q2 on NOK 51 million in EBITDA, and that's up from NOK 38 million in the pro forma. We are talking about the Xplora Group.
The Xplora Group is the combination of the old Xplora and Doro. Doro is launching their own report since they are publicly listed at Nasdaq Stockholm. I will refer to Group as the total company. I will refer to Kids and Youth as the old Xplora and Senior as Doro for those who are not familiar with these terms. We see then the group revenues. As I've shown, we have a very strong increase year-over-year. The gross profit is also increasing in the quarters, going from 48% to 50%. On the EBITDA side, you can see that we have also added a small square, the white square on top of it, to show the adjustments that are purely one-offs. In Q1, we had one-off transaction costs of NOK 11 million. We had also one-off transaction costs in Q2 because we had one acquisition loan in Q1.
We changed it to a new loan in the end of Q1, and therefore, we have also some transaction costs related to that that came in Q2. The last one-off that we have in the numbers is that in the Senior segment, Doro has discontinued the IVS entity, and there is a provision for that in the numbers here. Those who know what IVS was or is for the time being know that that's a pure logistic entity that Doro has used in order to move goods from their distributor in Czech to the end user. They have tried to discontinue this for a period of time, and now is the time to do it. When it comes to the segment Kids and Youth, as you can see here, we have also a strong year-over-year growth on the revenue side here, NOK 195 million to NOK 219 million in Q2.
You can also see the steady service revenue that is on the dark red on the bottom here. That dark red revenue stream has a gross margin of 83% in every quarter, maybe 82.5% in one quarter. When it comes to the service revenue, we also see that we are gradually building this service revenue into annualized recurring revenue. That annualized recurring revenue is now NOK 327 million, and that's up NOK 64 million year-over-year. This is basically with the 83% gross margin. The gross profit is also increased in the Kids and the Youth segment, going from 48% a year ago to 54% in Q2, mainly because of our new generation of products that Sten mentioned. We can also see a very strong revenue growth in the Senior segment, where the revenue increased with 19% from NOK 208 million to NOK 247 million.
The gross profit is also increasing substantially in the Senior segment, and that's mostly related to the increase in revenue, but they're also doing a good job in the logistics part of the business. You will see the gross profit in Doro or in the Senior segment is NOK 115 million, and in the Kids and the Youth segment, it's NOK 116 million. The gross profit is the same in Q2 from both segments. How is the cost side of the business? We see that the addition of the Senior segment is in the light red on top of the dark red. As you can see here, the operating cost as a percentage of the last 12 months' revenue is gradually decreasing over the quarters. Now we have, and that's very important for everyone, that we are not spending more money than actually our business allows us to do.
The key increase in cost is related to marketing in the quarter, both in the Senior division. It's about NOK 10 million in additional marketing costs in the Senior segment. If you look at the profit and loss, we go a little bit further down. You can see also the depreciation is now in the quarter NOK 13 million. In Q1, we had NOK 24 million. The reason why this is going down is that Q1 was the last quarter we had this extra amortization of Xplora Mobile customer contracts that you know. That's the main thing of the depreciation and amortization. I expect then that when we have the current level of intangible assets, this is the level that we are on for the time being. Q1 was quite special in that sense. I will go a little bit more into the net finance expenses in the quarter.
We can split it into three portions. One is the interest of the loan. We have the acquisition loan for EUR 82 million. The quarterly interest is NOK 15 million, including a fee, in a full quarter. In Q1, we had about NOK 12 million. The reason why it's lower is that we took it at the end of January, so it's not the full quarter. The other part of the loan of EUR 82 million is that we have also hedged the loan so that 75% of this Euribor part of the loan is therefore also hedged. Since the euro has increased during the quarter, we have also a non-cash impact of NOK 38 million in the quarter for this loan. Please note that all our revenues are in euro. That's also why we can live well with changes in the exchange rate on the loan.
The last item here is NOK 7 million other financial items. That's all other financial items in the Kids and Youth segment and also in the Senior segment. That was the same level as we had in Q1. In the balance sheet, I'm not going through all the numbers, but there's one number that you need to take a particular look at, and that's the inventory that is built up during the quarter. It's about NOK 100 million that is built up in inventory in the Senior division. Sten will come a little bit back to that. Basically, it's a scale-up in light of the expectations for the second half. That's a very cautious decision to build up inventory so that we have enough for the second half of 2025. When you look at the cash flow, we are going into most of these items. I got some questions last time.
What about the CapEx? As you can see here, we had CapEx of NOK 15 million in Q2, and we had NOK 16 million in Q1. In Q2, approximately the split is half of it in the Senior segment and half of it in the Kids and Youth segment. We are ending the quarter with a very strong, positive, good cash position of NOK 530 million in the bank. Thank you.
All right. Good morning, everyone. As very new as an Acting CEO of Doro, it's my pleasure to present that part for the first time. Doro is very well positioned in the Senior market. The focus, in addition to maintaining and hopefully growing the underlying business of Doro Funds, is also to add the Doro Connect SIM that was launched in the Swedish market in June.
The size of this market segment is roughly 120 million Seniors in Europe and growing. There is a huge potential for the business in this segment. In addition to stabilizing and growing, which we showed in the previous quarter, the underlying business, the key factor, the key focus going forward is to add Doro Connect in the eight- core markets where the business will launch Doro Connect SIM cards. A little bit similar to Xplora, for Xplora it's very often the parents who buy for the kids. In this segment, it's very often the kids of the senior who buy the product. An important reason for the shift in the business trend from being a declining business to showing growth in the previous quarter, year-over-year, is the launch of two new product services. Doro Aurora is the first real smartphone for this segment.
It has been launched on May 20th, and we have now over the last few months also received homologation approvals in the networks from various telcos across Europe. The sell-in started very good, has continued good, supported by heavy marketing, referring to Knut 's remark on the increase in marketing spending. It continues to be rolled out across European telcos and also started selling that product with a SIM card in Sweden in June. The second big new product series is the Leva feature phone series that was introduced earlier this year, meaning before Aurora. That continues to be a success and a main contributor to the increase of revenue. It holds a very solid position in the feature phone segment. What also helps drive the revenue growth is the shift from the 2G to 4G in the networks across Europe.
You may have seen some announcements also from Norway that one operator is closing down, and that drives, of course, the revenue of these new products that have 4G. It also has HD Voice, the super clear voice for better sound quality. You also see the caller ID, the person calling the phone without opening the flip. There is also a safety and emergency button included in it. Two new series of products with different variations, of course, help turn around the business back into growth. We launched Doro Connect on June 17th, a little bit ahead of the date that we talked about last time. It has currently been launched in the Swedish market on the direct-to-consumer channel, meaning Doro's web shop. The business introduced three different price plans. There is the Doro Pure Voice for the feature phones, and then there are two data plans.
These plans are designed to be fair for the end consumer, meaning not overselling gigabytes in combination with phones that don't have such a high consumption. It's a customer value proposition behind it. It's not about price and gigabyte. Going forward, the business will also add services on top of it, for instance, emergency services. It becomes more than just a pure mobile connectivity service. The start in Sweden on the Doro web took place, as I said, on June 17th. We have had initial sales, and I guess you are very curious, so is it going? It works. It works. Could work better process-wise, but there is a share of SIM connected sold over phones of 13%. We said, you know what the number is? If we say get 10% over two years, it contributes with additional NOK 300 million gross margin to the business.
I think good, we have started. Going forward, the rest of the year, we showed this last time as well. There is no change. The only change is that we have now launched in Sweden since last year, since last quarter. We will add on with new markets now in Q3, as you see here on the slide. Later this year, there are some big markets coming as well. That's for the direct-to-consumer, which means Doro web shops and sales on Amazon. We will announce retail agreements during the remaining of the year. We are now starting after the summer break, the sell-in to the different retailers in the various markets in line with the planned rollout. Into the Kids and Youth segment, we have now added Youth to Kids previously. That means that the market size has substantially increased to at least 80 million potential customers.
I will come back to that on my last slide, introduced a phone for the Youth segment in combination with HMD. We have started also with services, parental services for the Youth segment. We will add on with mobile price plans for the Youth segment in line with the rollout of the price plans for Doro. Not 100% overlapping, but basically the same rollout. To the numbers of the Youth and Kids segment, we have, I would say, a fantastic service revenue growth, 25% year-over-year, taking us to NOK 82 million in the quarter. The annualized recurring revenue increased to NOK 327 million. We see that the service revenue from outside of the Nordics keeps growing, also in percent over the total, making now a 20% share of the service revenue, up from 13% the previous year, making us more equal across the business. The German market performs extraordinarily well.
The German market had a growth of 144% year-over-year of the service revenue and has now become our third biggest service revenue market after Norway and Sweden. It accounts for NOK 10 million service revenue in the quarter. This is, I would say, my favorite slide because it shows two things. Number one, the bars indicate the watch activations. Watch activations mean the first time the watch is used by the end consumer. It's a combination compared to sales from direct sales from Xplora's web shop and on Amazon and indirect sales through the telcos and retailers. The second point with this graph, and you see the number is increasing year-over-year, quarter- over- quarter, but there are big differences between the quarters.
If we then take the line here on the top, which shows the percentage of these activated watches being activated with a service, that line is a 12-month average, 12 months rolling. You see that's up then from 26% two years ago to 33% last year and now up to 37%. If you analyze the monthly numbers that we published for Q2, you will find that the service share in Q2 2025 was exactly 50%. The 37% is a 12-month rolling, but the latest quarter was 50%. That explains much of the improved EBITDA of the business. We have said that we would go a little bit further into the details in two out of four quarters. Where do we actually sell the products by market and by channel?
In the first half, we sold 154,000 phones in the Kids and Youth segment, and we had a record high Q2, even higher compared to two years ago when we announced the European distribution agreement with Broaddus. We were slightly above even that number in Q2. You see that Nordic accounts for 26% of the sales, and the rest of Europe, where Germany has a significant portion of 72%, while North America was 2%. On the right-hand side, you see the channel split where the telco accounts for 47%, retail 29%, the Xplora web is growing 11%, and Amazon is quite stable at 13%. You have some insights on the markets distribution and the channel distribution. One more on the same topic: what is the difference between the smartwatch unit sales and the activations? In the first half of this year, we sold 154,000 smartwatches, but 207,000 were activated.
That is the in and out of the indirect sales, meaning what is the inventory at the end of Q4 with the distributors, the retailers, and the telcos. That is why you get these very big fluctuations, especially in Q1, which traditionally is low. On the right-hand side of this slide, if you look in the longer term, the last 12 months, you see that there is hardly any difference between the number of units sold and the number of smartwatches activated. That means that we are not building up or reducing the inventory on average. Back to the service subscription base, we think it's pretty strong that we still grow with 40% from quite a high volume also last year in the quarter, so up 40%. On the right-hand side, you see the distribution between the different service categories. We are now at 271,000 mobile connections.
That was an increase by 50,000 or 22% year-over-year. The Premium service has really taken off. We have promoted that even stronger, especially on our web shop, taking us to almost 90,000 and close to 100% growth. The B2B subscriptions is the revenue that we get from the telcos when they sell our mobile smartwatch with their own connectivity. We have reached 25,000 and doubled the volume compared to last year. The service fee, as I said, for those few who don't want to have an Xplora subscription in our web channels, there is still an opportunity to use another service. The same goes for retail in some markets, but they have to pay a service fee. We have 8,000 there. Totally up 112,000 year-over-year, 40%. The mobile subscriptions, 271,000 as I said, 22% growth.
Perhaps take a look at the right-hand side where you see that the net out of the net growth of 50,000, 27,000 came from the German market that accounted for 54%. Nordics 28%. If you remember last time, I said Spain is doing good, continues to do good and will do even better in the second half of the year with 9% of the net growth. Another one super important for the business performance is the ARPU. The ARPU is the average revenue per user for the connectivity service. That increased by NOK 6 year-over-year. That may not sound so much, but you look at the numbers further down there, it has an annual revenue or equal to EBITDA effect of almost NOK 20 million . What are the drivers for this? It's an increased sale of Xplora Premium.
In some of the web shops, we have exclusively only selling the mobile connectivity, including the Premium service. It also means that we have done several price adjustments over the last few years. That means that when customers churn, the new customers come in on a higher mobile tariff price. We have also done annual price adjustments. We did that first of July last year. Post-quarter, we have also done it this year for in many of the markets. We increased the prices on the 1st of July. We have a blended gross margin here of 82%. These small tweaks on the pricing have a considerable impact on the business performance. At the end, one last slide on the youth phone that we introduced during the quarter in June. In cooperation with HMD , HMD Fusion X1 . It's now in place in several markets.
You will find it in the retail in the Nordics. Two Nordic operators have also bought and listed the product. The clue here is that Xplora has a service fee for the end consumer for the Guardian service, the function that the parents use to steer the content on the phone. That is EUR 5.99 or equivalent in the various markets. That's what we have launched. Independent of if it ends up with a telco mobile tariff or an Xplora tariff or whatever, the customer has to pay EUR 6 for the Parental service to use it. We will also roll out Xplora mobile tariffs for the Youth segment, ordinary mobile tariffs in line with what we are then preparing for Doro. Not exactly the same dates, but all the backend is being done for both Doro and for Xplora subscriptions. I think that was my part. Thanks.
All right. Thank you so much. More and more numbers for every quarter, but as long as it's a good number, I think that's fine. We are all good. Of course, we will stay here after the event. If you would like to have some one-to-one follow-up or even dig even further into the number, we'll be here. We have multiple meetings throughout the day as well, making sure everyone really can get into the details. I mentioned at the start that we would give you a little bit more glimpse into the future because a lot of things are going on. We would like to highlight at least four topics to you all. A little bit about the development in North America.
We will look into something we also know a lot of you really would like us to have, and that is business-to-business service revenue, meaning that it's not only our hardware that has to be either the enabler or the bottleneck for how many SIM subscriptions or service subscriptions we are selling. We'll touch a little bit or into business-to-business service revenue opportunities. I know, as Kjetil mentioned, some small highlights on how it performs with SIM conversion on Doro. I know everyone also would like to know a little bit about how does the underlying business of the Doro or Senior go as well. We'll share that. We'll make an endpoint here with an annualized recurring milestone that we have achieved, making it even easier for you to calculate and really see the scalability and opportunity of the business. Starting with North America. North America, it's a big continent.
It's not super easy to really do amazing out from the start. We're working harder with the American team, North American team, and making small progresses. Actually, what we have experienced and see is that the Canadian market, part of North America, seems to be developing quite nice when it comes to this category and also significantly fewer competitors than in the U.S. The North American team had actually been able to secure what we believe might be a good deal in the future. We are not launching a new MVNO setup, but we, in partnership with Bell ’s network, are now able to sell our smartwatches in the Canadian market with our own SIM to also then drive service revenue in that regard.
What is really interesting for us as a good opportunity, we are launching online in August, but throughout September, our product will actually be rolled out in 30 Best Buy store locations across Canada. That's been one of the most important things for us to, at some point, achieve in the U.S., not just online, but also physical distribution. With Best Buy in Canada, this can be a very strong opportunity for us going forward in the North American markets. We just wanted to highlight that as this was closed at the end of Q2. The next one I will explain about or outside was just on the slide because, as you know, currently, Xplora is selling hardware products, and we are trying to attach as many SIM as possible toward that volume we're selling of our smartwatches.
That's why Kjetil particularly emphasized that when we IPO'd or shortly after, we had a very solid number of 25%. If you sold 100 watches, 25 of them would activate our SIM card. The team has been working very hard to optimize how can that percentage be as high as possible. Like Kjetil now said, average is now 37%. That's such a huge effect going forward. Still, it's 37% of us selling 100 watches, right? The bottleneck would in any way be 100. What we have been trying to achieve for the future to be able to scale services even more is to offer our applications, our platform, our services, even our SIM to other hardware manufacturers because then the 100 we are selling is no longer a bottleneck, but we can leverage on everything being sold from partners as well.
A lot of investors in the market in general also like business-to-business high profit service revenue, right? What we have extended now with HMD that has been providing our product for use is also that we have signed an agreement with them. They are now licensing our family IoT platform and Guardian app so they can offer that service into many more of the products they are selling into many, many markets. The business model is, of course, a high margin monthly licensing fee per user when they are utilizing our Parental and Guardian app. Please note that we are expecting to very shortly be able to announce the first major agreement done by HMD with a major operator that will use this model.
We are very excited on this, meaning that with success, we can now launch this as a business-to-business model into multiple manufacturers also selling products, smartwatches, phone, whatever have you. A big milestone for us. First was Kids' development in North America, then it was Youth. Let's also give some news on Senior happening beyond Q2. All of this data and insight, of course, is also available in the report being published by Doro today. That's why we can highlight some of the news from that today as well. Kjetil mentioned its two primary product SKU, the Leva and the new Aurora series. What really to pay attention, and Knut mentioned, we have the same strong cash position end of this quarter, NOK 530 million, but we have added a significant volume of goods in Doro on top of that.
The reason for building that inventory in stock, as Knut mentioned, is that Doro is entering Q3 with the highest order reserve to date, a lot driven by introducing two favorable new product lineups, meaning that we are entering with a strong momentum going into Q3. The underlying business, as Knut explained, both in our core business Kids, and as you can see with this also in Doro, is going very well. As Kjetil mentioned, we are on track with the implementation process of SIM. Very good. For everyone really liking to analyze and do the math on our business, I think even before we IPO'ed, we had like a big dream, at least the finance team had. That was the day we are able to have service revenue covering all our costs. We have reached a very important milestone, right?
That's why we were really happy when we surpassed, we recently announced the 400,000 subscription mark or 406,000 subscriptions. As you can see on the graph here on the right-hand side, our annualized recurring revenue, as you can see in the red graph, is actually now higher than all our operation costs minus marketing costs, meaning that we have reached this point where the revenue from our subscription and services have surpassed our operating costs minus marketing costs for selling new products. For a company like us, that's a huge milestone. We are super happy for that. We haven't even started to add subscription revenue from two big new categories in volume. That's really good and something we really wanted to pinpoint to you all today.
A slight revised framing on the outlook, not much, but we'd just like to emphasize that we have updated it slightly, which now says that our focus will be to continue to grow our core business from Kids and now, of course, adding Youth. We have launched, so we have removed that, but we have now launched the Doro product with Doro Connect as well. As Kjetil said in the timeline, I would just like to emphasize that timeline as well to set the expectations. We have launched online with Doro in Sweden. In Q3, we are launching in the Nordic markets, and in Q4, we are launching in the rest of Europe. Please remember, online sales is the smallest channel to Doro. As Kjetil said, we are already at a good percentage conversion rate. You all recall 10% conversion of all the volume adds NOK 300 million to the EBITDA.
Early data shows north of 10%, as Kjetil said, on Sweden. The numbers are still not significant. It's one channel, one market, but we are on track on our trajectory. Q3 online in the Nordic in Q3. Our most important target in the outlook statement sharing with you investors is that we are hoping to have the first significant conversion data when we're ending Q3. We will continue to focus on service revenue growth long-term and increase our profitability, EBITDA and EBIT, as Knut explained, and continue to secure the path to 1 million subscription.
It's also crucial for us now when we are having quite a lot of roadshows, not just in Norway, in Sweden, and eventually the rest of Europe, to really build the marketing for the share and the business that we are focusing heavily on 1 million subscription, but also a transition from a kids' smartwatch company to a family IoT company selling services and products. That's the revised outlook statement. I would like to welcome everyone back on stage, and we can move into the Q&A. Just bring it straight on to Peter.
Thank you. Is it on? Yeah. Just a couple of questions. The first one is on Senior, where there's been very strong growth both in Q1 and in Q2. Can you just remind us how much of that is price and how much is volume related?
I don't think we can go into those details. What we know and what you can also see is that they had an old product lineup last year, and then they introduced the new Leva series during Q1, and then the Aurora series in Q2. It is a very different product mix that they have this year compared to previous years. We will not be able to comment in specifics on that unless you have some more insights, Kjetil.
OK. Secondly, just on the gross margins, which has improved significantly, not only due to mix, but is there only price effects that increase the gross margins within the hardware side of the business, or is there anything else you have done in the value chain that also have improved the gross margins on hardware?
I can take the first point since it was on my slide. We are trying to renew some of the models. On Xplora X6Play, one of our flagship products, we have actually built a second generation of that. Due to the change of components, we have been able to reduce the cost of the product and increase the margin by holding the same price to end consumer.
All right. Just a final one, I guess that's to you, Kjetil, even though you launched in June. Is it possible to compare the launch of Doro services in Sweden to what you saw back in the days in Xplora in Norway, for example, so far, even though it's just a couple of months or so?
Number one, I can't recall it, but there is a significant difference. In the Kids' segment, it's the kids' first SIM card. When we do it now in the Senior, the consumers already have a SIM card. It's about how can we make them change? That's why we said we focus on making fair SIM or mobile subscription plans that are adequate to the consumption. No, I think we can't compare it because it's the first SIM card and eventually the last one. No, it doesn't make sense. Sorry.
Thanks. Fair point. Yeah. I think, Peter, just your comment, that's why we, even though it's small volumes due to the channel and country, we just wanted to give you at least that one comment that we are on track and at least numbers are above what we have used as a reference point. Hopefully, during Q3, we will have more markets and more solid data to share.
First on the conversion rate in Doro, can you just, so we can understand that number, specify, is that 13% of the phones sold in the web channel or of all phones sold in Sweden through all channels?
No, it's compared to the web channel only. Just to set a little bit of expectations here, one, when the consumers who buy their SIM card, they have an existing SIM card. There is a so-called port-in process as well. Doro's backend systems are not ideally where they should be. We also need going forward to improve the sales and onboarding process and the whole logistics. It's not just about sales. We will also add additional services designed specially for the elderly to increase the attractiveness. There is a lot to do to increase that percentage.
Following up on that, on your planned rollout plan for Doro SIM, you say you want to roll out in the other Nordic markets in Q3 and then Germany, France, U.K. Is that in Q4? You'll be live in all markets before year end?
Yeah, the latest one will be in Q4. If it's October or December, there is a big technical process going on, an implementation project going on. I don't want to say what week or month specifically, but I say we say in the second half that the Nordic markets will be first and then the remaining that you referred to.
As Kjetil stated on the screen, I put it up behind, that is direct-to-consumer online. Retail will be announced with whatever rollout plan will be with retail.
Thank you.
Be very specific.
Very clear. You changed your growth target on kids and youth. You previously had a target for 15% growth. Now you say annual growth. Can you specify why you changed this and your thoughts behind that?
The main reason why we are focusing growth and profitability in the NOK 1 million is that previously, if you go one year back, if you recall, we had this growth and we had 25% SIM conversion. Now, as Kjetil said, we have 37% SIM conversion, which is really the long-term driver for service growth. That's the key number. We will have solid growth, but the key thing for us is to grow the conversion rate, which gives even more effect. That's why we are honing more in on specifying on that number as well. We will have still good growth, and we see even further growth in the SIM conversion, meaning that it's the channel mix, the product mix, and how we sell it that is really the key driver for the strong results we see now.
Thank you. Last question. You have a pretty big pile of cash now. Also, as you said, you've tied up NOK 100 million extra in inventory. The cash at year end is probably going to be pretty solid. Can you explain why you choose to have this big pile of cash? Why don't you, for instance, pay down some debt and reduce interest costs? What are your thoughts on how you will use this cash balance?
It's quite important now to have this cash balance. We are still operating as two different units. One is Doro and one is Xplora. We need to keep that strong cash position also going.