Good morning. Let's go to the next slide. It's time for our Q2 2021 result presentation. The Q2 is a staple for the year overall performance. The results in Q3 and Q4 all depends on the groundwork done in this quarter.
And today, we are very excited to give you the results. My name is Storn Kurperk, CEO and Founder of Explora. And with me, I have our CFO, Michael Clement, and we will guide you through this presentation. We have split it in 3 sections. 1st, a high level overview.
Michael will take you through the financial details, and we will summarize it and with an outlook and then followed by a Q and A session. Before we go into the report and also to welcome our new audience and shareholders, allow me to take 2 shares and summarize the company strategy. Explora is leading the way in a very rapid growing market for kids smartwatches. Our mission is to give children a safe onboarding to the digital world and we'll introduce appropriate products and services. And what is so very exciting is the fact that we are capturing the next generation of digital consumers with our first kids smartwatches, their mobile phone, their mobile subscription, the digital ecosystem and now also a solution for pocket money and payments.
Our product and service strategy is developed around 4 key elements. We have our smartwatches with SIM connectivity, being a phone and also we have activity trackers. And the beauty with the phone is that they rely on connectivity. Hence, in our service proposition, we also have our own SIM plans providing high margin revenues. For the platform and software, we have focused on 3 services: our IoT platform, our Activity Go Play platform and upcoming arcade.
This will also be the foundation of our upcoming premium services. Lastly, we have separated FinTech into its own focus area given the growth opportunity in the sector. All right. With that intro, let's dive into the results. For the Q2, we have experienced increased momentum, a growth in product revenues, growth in service revenue, growth in gross margin and we have generated a positive EBITDA.
The company has also delivered in Q2 the most ambitious development program in the company's history. I will summarize that in the outlook. In addition, we have also successfully post acquisition integrated Explora Mobile, the previous MVNO. All in all, resulting in group revenue up 2.85 percent to NOK93 1,000,000 with gross margin ending at 42.6 percent and an adjusted EBITDA at NOK 3.5 million. I would also like to summarize some high level operations.
On the product and service side, we have also in Q2 completed the development of Connect, Arcade and Xplora Pay, and we have also secured significant enhancement in our Go Play platform as well as the Go Play Store. We have also successfully launched our X Go 2 and our X Move product into various channels. That also means that from a distribution point of view, we are now presenting in 19 market throughout online channels and other distribution partner agreements. We have also during Q2 increased our new retailers and added retailers such as Chivo, John Lewis, Currys, Annie, and more. On the service side, we have also managed to increase our mobile subscribers from 80,000 to 94,000 ending Q2.
And as you may know, we just recently announced 100,000 users in early Q3. We have also a milestone win for our B2B module with 1 of the leading Nordic retailer, which will be announced later. Furthermore, we have also secured partner agreements with our 1st ad networking model as well as integrated new studio partnerships throughout Q2. The accomplishment mentioned allows us to move into second half of this year with a great momentum with wider distribution, new services and far greater scalability. And with that, I would allow Michael to take us through some of the detailed financial summary.
Thank you, Stan. 2021 is a remarkable year for And it's also a year of transition. Up until 2021, pretty much All our sales have been driven by sales of devices, expanding our footprint in several markets. Through 2021, we're now introducing mobile subscription revenues, a recurring revenue stream. And moving into the second half of twenty twenty one, We will add on to that with a number of new recurring revenue streams.
But looking back Q2 marked the continuation of the very strong trend we saw in the Q1 of the year. We sold a total of 79,000 smartwatches in the Q2 of this year, a growth of 180% from the same quarter last year and a growth rate that was higher in the second quarter than in the first quarter. Looking at our mobile segments, mobile subscriptions has continued to grow on a very steady and very strong basis from month to month. As Stan mentioned, during Q2, we increased our subscription base in the Nordic markets From 80,000 mobile subscribers to 94,000 mobile subscribers. And we recently announced having 100,000 mobile subscribers in the Nordic markets.
We had, as of July, 98,006 100 subscribers, most of those 64,000 were in the Norwegian market, the market that we have been in the longest Through mobile, Sweden had 25,000 mobile subscribers with Finland and Denmark Having the shortest history. Looking at this from a penetration point of view, we address Today, children in the age group of 4 to 11. Looking at that population size, in the Nordics now, we're at Just above the 4% penetration in that target segment. Whereas in Norway, where we have had the longest track record, We actually are at more than 13% penetration in the age group. Sweden is following At 3% penetration, Finland at 2% and Denmark at just below 1%.
Total revenues, up 285 percent in the 2nd quarter to NOK 93,400,000. Underlying sales of smartwatches are showing very solid strong growth to NOK 69,000,000 With the introduction of mobile recurring mobile subscription revenues at NOK 24,000,000 in the second quarter, representing 26% of group sales. Moving into the revenue breakdown on a geographical basis. 1st into devices, SEK 68.5 NOK1 1,000,000 in total device sales in the quarter. Germany represented our largest market in the 2nd quarter followed by sales to Norwegian clients.
Moving on to services. Norway represents the largest market given the largest number of mobile subscribers with close to 3 fourths of total service revenues of SEK 24,000,000 driven by the Norwegian markets. On a consolidated basis, total sales, dollars 93,400,000 Norway, it represents the largest market with 43% of group revenues, followed by Germany at 36% and Sweden at 10% of revenues. Brief highlights. In other words, Q2, 285 percent sales growth from NOK 24,000,000 In Q2 last year to NOK 93,400,000 in Q2 this year.
We see a similar scalability in our gross margins And gross earnings. Gross earnings are up by 11 51% year over year from a gross margin of 13% last year to 43% in Q2 this year. 43% is also a margin that is up from the 2 previous quarters where we have posted gross margins of around 35%. Underlying operating costs are up by 2 21 percent from Q2 last year to Q2 this year to 36,300,000 Moving EBITDA from negative SEK 8,100,000 last year To $3,500,000 in adjusted EBITDA in the Q2 of 2021. We have several times talked about the scaling of our operation.
Now this is the transitional period in 2021 is naturally a very important building block for building that continued scaling. Explora has shown very, very strong growth Over the last few years and that growth continues. Looking at these variables on a 4 quarter rolling basis, Our top line, our group revenues are now at more than SEK 300,000,000, a growth of 2 50% from the same period a year earlier. Our gross profitability is up to more than SEK 110,000,000 over the last four quarters for a margin of 37% from SEK 10,000,000 a year back for a margin of just in excess of 10%. And we also See then that the 4Q rolling EBITDA adjusted is up in positive territory over the last four quarters for a margin that is now approaching 10%.
We seek to continue this scalability as we move ahead through 2021 and into 2022 through the release of new services and continued growth in our mobile subscriber base. Let's look a little bit on the details of the P and L. First, Q2. Group sales, as mentioned, SEK 93,400,000, up 2.85 percent from the same period last year, driven by a 2 0 3 percent growth in smartwatch sales to CAD 68,500,000 And services, recurring service revenues at CHF 24,200,000 representing 26% of group sales. Gross margin 42.6 percent versus 13% last year, up from 35% over the last two quarters.
Total operating costs ended at SEK 38,400,000 and they include SEK 12,200,000 in brand marketing costs, largely also driven by an increase in payroll on a higher headcount. We exited Q2 with 77 employees in the group, up from 51 at the end of Q1. OpEx also includes SEK 1,100,000 in one off costs and SEK 900,000 in optional costs. We reported a positive EBITDA SEK 1,400,000 in Q2, up from a loss of minus SEK 8,300,000 with EBITDA adjusted for one offs and option costs of positive SEK 3,500,000. Depreciation and amortization increases quite a bit from previous quarters on amortization of intangibles from the acquisition of Explora Mobile Holding in accordance with the NGAP.
Depreciation and accounting and amortization, a total of SEK 14,300,000 of which around SEK 1,500,000 is amortization of our capitalized R and D. Pretax profit ends at minus SEK 12,800,000 in the 2nd quarter versus minus SEK 10,600,000 in Q2 of 2020. For the first half, Explora Technologies posted group sales of 147,400,000, a growth of 22% from the first half of twenty twenty. Smartwatch sales were up 180% SEK 219,900,000 and services represent 18% of our first half sales at SEK26,600,000. Gross margins in the first half are at 39.9 percent, up from 16% last year.
And EBITDA, A negative SEK 9,500,000 versus a loss of SEK 15,500,000 in the first half of twenty twenty. Profit before tax in the first half is minus SEK 26.4 million versus a loss of SEK 19,000,000 in the same period last year. Moving on to our balance sheet. Total assets increased to SEK 534,600,000 from SEK 333,500,000 at the end of the previous quarter. The key driver is the acquisition and consolidation of Explora Mobile Holding.
Financial fixed assets are up to SEK260,800,000 from SEK8 1,000,000 in the previous quarter. On the goodwill and customer contracts assigned to from the acquisition of Xplore Mobile Holding. Accounts receivable are up to SEK 66,000,000 from SEK 11,700,000,000 and inventories are up to SEK 40,900,000 from SEK 27,600,000, Up both on the consolidation of Explora Mobile Holding as well as seasonality moving into a stronger second half of the year. Explora exits Q2 with a cash balance of NOK 144,000,000, which includes interest bearing loans of SEK 36,200,000. Other short term liabilities are at SEK 84,700,000 And they include a earn out element for Xtora mobile holding of SEK 20,000,000 and is also up on preorders of devices for delivery in the second half of the current year.
Finally, equity That's at SEK 388,600,000 at the end of Q2, up from SEK 261,300,000 for an equity ratio of 73%. The equity is also up on the payment for share based payments of Xplore Mobile Holding during the quarter. Finally, cash flows. Cash flow from operations are negative SEK 18,400,000 in the This includes working capital tied up in preparation for higher sales activity in the second half of NOK 20,000,000. Net cash from investing activities is negative NOK 80,300,000 in Q2.
The net cash effect of the Explora Mobile Holding acquisition is SEK 76,900,000 negative And we capitalized development cost of SEK 3,400,000. The net change in cash Financing is negative SEK 2.6 billion primarily driven by down payment of short term liabilities In Xplore Mobile Holding, a net change in cash during the quarter is a negative €101,400,000 with cash balances Therefore, ending at NOK 144,000,000. That's a quick run through of our financials. And, Sten, why don't you take us through what we're in for Over the next few quarters.
Thanks, Michael. So, to recap our position, foundation is set. All products are now available in our markets and we are available with a channel footprint of nearly 20 markets. Given the fact that Explora is now by far the number 1 in terms of product, service debt, as well as distribution power and footprints within our markets. And now I would like to take you through the various launch date and rollout plan of new services coming in second half of this year going forward.
Starting with Explora Connect, our connectivity and SIM plans, a service that we previously have announced and also now further refined after the acquisition of Xplora Mobile, the previous MVNO in the Nordic. The current global rollout plan is now set to be launching in the U. S. Market during Q3. Then we'll move forward to Canada in Q4.
We'll then also start our EU launch first up with UK and the German market also in Q4. Then the remaining part of you will then be launched in first half of twenty twenty two. That presents the rollout plan for our global Explore Connect solution. In addition, we also have the full coverage our connectivity in Norway, Sweden, Denmark and Finland. Moving forward to Explora Arcade.
The arcade will provide kid friendly content, mini game and more. And it's safe and it's appropriate build for kids. And our very special feature is that the only way you can access the content is by having Explora Coins. Again, ExploraCoin can only be achieved by having a lot of activities and step. Hence, you can have a better balance between screen time and activity.
And also some of the Arkit content will be part of the upcoming Explora Premium content providing additional service revenues. Also, lastly here, I would like to bring up Explore Pay, which is our upcoming fintech solution, and it's all about teaching children the value of money as well as savings. From the Explora app, you can create your child's first pocket money solution. You can set weekly allowances and you will also have full control of your child's spend and use. Your child will also be awarded with their first debit card, all Explora branded.
Slightly later, you can even use the Explora watches with tap and pay solution. And we are super excited to launch the services in our 2 biggest markets, in Norway and in Germany during the Q3. So as you can see, we're building a very highly scalable business model, as you can see on the screen with the 4 various sections. The smartwatches already have a huge organic growth in sales, delivering also good margin. And with the connectivity, we already are providing more than 20% of our revenue coming from connectivity and SIMs.
Now also ready to launch this globally. And we will then also introduce our premium services from Go Play Arcade and additional premium contact and fintech content starting in second half. And lastly, as you can see from the platform and licensing services, we have already announced our first B2B platform agreements in Q2 with more details to come and be presented later this year. So to summarize, what we see is an increased awareness and increased demand, bringing strong sales growth. The company is on track to deliver on 500,000 units, which is the target for 2021, and a range of new services, including Explore Connect, ARkit and Pay is ready to be rolled out consecutively throughout the second half of this year.
The company, as Michael mentioned, also have a very strong financial base with NOK144 1,000,000 in cash. And we do expect the Q3 to extend the sales volume from this quarter in Q2. So with that, we'll now move into the Q and A section. Okay. So to repeat, if you have any questions, please enter the questions below the video feed.
And we will read the questions and then comment them as we go.
Good. Actually, I have a question here, Stan. What is the status on your U. S. Launch?
How far have we come? What type of expectations do you
have going forward? All right. So, for the U. S. Markets, The online channel is already live and been for a little while.
And we see already our online Amazon channel It's already our 2nd best performing market, stands for roughly half of the volume compared to our biggest online Amazon market in Germany. Currently, it's been the X5 that has Been live online in the States and we're now prioritizing given the size and opportunity in the U. S, we are prioritizing that to be the 1st Market to enter with our global SIM solution as mentioned in this presentation, also to enhance the user experience in the US market with our own SIM, and we're ready to launch that proposition in Q3. Also, we have already finalized and signed off the first key distribution agreements, which is essential to go live and build with retail in U. S.
Currently, we are now focusing on closing the 1st major retail and telco agreements in the U. S. In order to scale as in Phase 3 after our online launch. We have also finalized good agreements with partners at UNICEF and several studio partners.
Good. Could you give an update on competition or competitors?
Yeah, of course. I think it's fair to say that in general, we see the competitive landscape more or less same as previously or before. Normally, we see 2 to 3 players in each of the various markets. Although none of those still have the same depth in the portfolio and services as Xplora have, And also we see very few, if any, of those local players come across as a strong competitor across multiple markets. That said, we're looking into huge markets expected to be roughly 100,000,000 units over the next couple of years.
Flora will address roughly 1 to 2 of them going forward. So there should be good room for competitors going forward to build the market and build the size. We have seen a couple of what we would say is good players in some of the markets. I think Vodafone with their own neo product is a good one. But we also are seeing companies such as Vodafone even having their own portfolio of IoT products Still our opening for Xplore product within their channels.
So it's also fair to say that Xplore have a very unique offering in this growing market, both in terms of types of product, eSIM, non eSIM voice over IP, as well as the depth in our software and platform and content solution.
Good. Is this the new level of Depreciation and amortization we can expect going forward. Can you explain how you do the D and A for the goodwill? Absolutely. Through the PPA from the acquisition of Xplore Mobile, we have Good role on our balance sheet of roughly NOK 175,000,000 and we have customer contract values of roughly NOK 70,000,000.
They are depreciated on a linear basis over 5 years for goodwill and 4 years for customer contracts, respectively. So those are the policies applied. So yes, in large, Our level of D and A will be at roughly this level, moderately increasing with further capitalized development going forward. What is the supply situation for components, if any? Or is there a risk to your guidance?
Very relevant question these days. We are happy to report that we have already secured all the Stock for our Q3, we also already are confirming most of the deliveries for shipments throughout Q4 peak season. And currently, we can report that we have no red flag when it comes to units being shipped and delivered for 2021.
Good. And then there is a question about Explorer Connect. What are your expectations for Explorer Connect in terms of sales with devices?
Complex question, but we'll try to address it quite directly. It's also fair, I think, to address that question. It's one of the reasons also why we purchased The Explore Mobile, the previous MNO, and also one of the reasons why we prioritized in Q2 to the integration with Xplore Mobile and because of the background from the MVNO industry, also to further enhance Our own global solution before launching it. We have seen fantastic numbers in the Nordic when it comes to conversion of sales. Most of the sales actually comes with the pre bundled connectivity plan in the Nordic.
And we will deploy same strategy, same bundles across many markets in EU and U. S. So It's fair to say we have good expectations for sales throughout our own online channels as well as retail channels to pre bundle our Explora watches with our own global SIM. Of course, in Europe and U. S, we also have a strong driver of volumes from the Telco industry, which will bundle with their own SIM, but still open opportunity for us to upgrade to premium services.
Also, that's why we made the timeline quite clear for the rollout being U. S, the first market in Q3. After U. S. In Q4, we go into our biggest markets in U.
K. And Germany and start to launch Our product including our global SIM connectivity plans.
Good. No further questions at this time. I don't know if we should give it a second or 2 Once again, if you have any questions, please feel free to write them down in the Q and A section below the video feed. We'll try to answer as thorough as we can. No.
I think that sums it up,
-Sam? -Yes, everything addressed in the presentation or within these questions. So, as always, feel free to reach out to Michael or myself at any time. If not, also use our investor page, explore.com/investor to keep track with all the news We are leasing. If not, we will wish you all a wonderful day and speak soon again.