Good morning. It's time for our Q2 2021 result presentation. The second quarter is a staple for the year overall performance. The results in Q3 and Q4 all depends on the groundwork done in this quarter. Today, we are very excited to give you the results. My name is Sten Kirkbak, CEO and founder of Xplora, and with me I have our CFO, Mikael Clement, and we will guide you through this presentation. We have split it in three section. First, a high-level overview. Mikael will take you through the financial details, and we will summarize it and with an outlook, and then followed by a Q&A session. Before we go into the report, and also to welcome our new audience and shareholders, allow me to take two shares and summarize the company strategy. Xplora 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, we'll introduce appropriate products and services. What is so very exciting is the fact that we are capturing the next generation of digital consumers with their 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 four key elements. We have our smartwatches with SIM connectivity, being a phone, and also we have activity trackers. 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 three services, our IoT platform, our activity Goplay platform, and the 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 second quarter, 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 Xplora Mobile, the previous MVNO. All in all, resulting in group revenue up 285% to NOK 93 million, with gross margin ending at 42.6%, 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 Goplay platform as well as the Goplay store. We have also successfully launched our XGO2 and our XMOVE 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 Tchibo, John Lewis, Currys and more. On the service side, we have also managed to increase our mobile subscribers from 80,000 to 94,000 ending Q2. As you may know, we just recently announced 100,000 users in early Q3.
We have also milestone win for our B2B module with one of the leading Nordic retailer, which will be announced later. Furthermore, we have also secured partner agreements with our first 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. With that, I would allow Mikael to take us through some of the detailed financial summary.
Thank you, Sten. 2021 is a remarkable year for Xplora, 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 2021, we will add on to that with a number of new recurring revenue streams. Looking back into Q2 marked the continuation of the very strong trend we saw in the first quarter of the year.
We sold a total of 79,000 smartwatches in the second quarter 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 Sten mentioned, during Q2, we increased our subscription base in the Nordic markets from 80,000 mobile subscribers to 94,000 mobile subscribers. We recently announced having 100,000 mobile subscribers in the Nordic markets. We have, as of July, 98,600 subscribers. Most of those, 64,000, were in the Norwegian market, the market that we have been in the longest, through Xplora 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 4-1 1. Looking at that population size in the Nordics now, we're at just above a 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% in the second quarter to NOK 93.4 million. Underlying sales of smartwatches are showing very solid, strong growth to NOK 69 million, with the introduction of recurring mobile subscription revenues at NOK 24 million in the second quarter, representing 26% of group sales. Moving into the revenue breakdown on a geographical basis. First, into devices. NOK 68.5 million in total device sales in the quarter.
Germany represented our largest market in the second 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 3/4 of total service revenues of NOK 24 million driven by the Norwegian markets. On a consolidated basis, total sales NOK 93.4 million. Norway 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% sales growth from NOK 24 million in Q2 last year to NOK 93.4 million in Q2 this year. We see a similar scalability in our gross margins and gross earnings. Gross earnings are up by 1,151% 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 two previous quarters, where we have posted gross margins of around 35%. Underlying operating costs are up by 221% from Q2 last year to Q2 this year to NOK 36.3 million, most recently. Moving EBITDA from NOK -8.1 million last year to NOK 3.5 Million in adjusted EBITDA in the second quarter 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. Xplora has shown very, very strong growth over the last few years, and that growth continues. Looking at these variables on a four-quarter rolling basis, our top line, our group revenues are now at more than NOK 300 million, a growth of 250% from the same period a year earlier.
Our gross profitability is up to more than NOK 110 million over the last four quarters for a margin of 37%, from NOK 10 million a year back for a margin of just in excess of 10%. We also see then that the four-quarter 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&L. First, Q2. Group sales, as mentioned, NOK 93.4 million, up 285% from the same period last year, driven by a 203% growth in smartwatch sales to NOK 68.5 million, and services, recurring service revenues, at NOK 24.2 million, representing 26% of group sales.
Gross margin 42.6% versus 13% last year, up from 35% over the last two quarters. Total operating costs ended at NOK 38.4 million, and they include NOK 12.2 million 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 NOK 1.1 million in one-off costs and NOK 0.9 million in option costs. We reported a positive EBITDA of NOK 1.4 million in Q2, up from a loss of NOK -8.3 million, with EBITDA adjusted for one-offs and option costs of positive NOK 3.5 million.
Depreciation and amortization increases quite a bit from previous quarters on amortization of intangibles from the acquisition of Xplora Mobile Holding in accordance with NGAAP. The depreciation and amortization a total of NOK 14.3 million, of which around NOK 1.5 million is amortization of our capitalized R&D.
Pre-tax profit ends at NOK -12.8 million in the second quarter, versus NOK -10.6 million in Q2 of 2020. For the first half, Xplora Technologies posts a group sales of NOK 147.4 million, a growth of 222% from the first half of 2020. Smartwatch sales were up 180% to NOK 119.9 million, and services represent 18% of our first half sales at NOK 26.6 million. Gross margins in the first half are 39.9%, up from 16% last year, and EBITDA NOK -9.5 million versus a loss of NOK 15.5 million in the first half of 2020. Profit before tax in the first half is NOK -26.4 versus a loss of NOK 19 million in the same period last year.
Moving on to our balance sheets. Total assets increased to NOK 534.6 million from NOK 333.5 million at the end of the previous quarter. The key driver is the acquisition and consolidation of Xplora Mobile Holding.
Financial fixed assets are up to NOK 260.8 million from NOK 8 million in the previous quarter on the goodwill and customer contracts assigned to from the acquisition of Xplora Mobile Holding. Accounts receivable are up to NOK 66 million from NOK 11.7 million, and inventories are up to NOK 40.9 million from NOK 27.6 million, up both on the consolidation of Xplora Mobile Holding, as well as seasonality moving into a stronger second half of the year.
Xplora exits Q2 with a cash balance of NOK 144 million, which includes interest-bearing loans of NOK 36.2 million. Other short-term liabilities are at NOK 84.7 million, and they include a earn-out element for Xplora Mobile Holding of NOK 20 million and is also up on pre-orders of devices for delivery in the second half of the current year. Equity stands at NOK 388.6 million at the end of Q2, up from NOK 261.3 million, for an equity ratio of 73%.
The equity is also up on the payment, the share-based payment of Xplora Mobile Holding, during the quarter. Finally, cash flows. Cash flow from operations are NOK -18.4 million in the second quarter this year. This includes working capital tied up in preparation for higher sales activity in the second half of NOK 20 million. Net cash from investing activities is NOK -80.3 million in Q2. The net cash effect of the Xplora Mobile Holding acquisition is NOK -76.9 million, and we capitalize development cost of NOK 3.4 million. The net change in cash from financing is NOK -2.6, primarily driven by down payment of short-term liabilities, in Xplora Mobile Holding, and net change in cash during the quarter is NOK -101.4, with cash balances therefore ending at NOK 144.0 million. That's a quick run-through of our financials.
Sten, why don't you take us through what we're in for over the next few quarters?
Thanks, Mikael. 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 Xplora is now by far the number one in terms of product, service depth, as well as distribution power and footprint within our markets. 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 Xplora 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. We'll move forward to Canada in Q4.
We'll then also start our EU launch, first up with U.K. and the German market, also in Q4. The remaining part of EU will then be launched in first half of 2022. That present the rollout plan for our global Xplora Connect solution. In addition, we also have the full coverage of connectivity in Norway, Sweden, Denmark, and Finland. Moving forward to Xplora Arcade. The Arcade will provide kid-friendly content, mini game, and more. It's safe and it's appropriate built for kids. Our very special feature is that the only way you can access the content is by having Xplora Coins. Again, Xplora Coin can only be achieved by having a lot of activities and step. Hence, you can have a better balance between screen time and activity.
Also some of the Arcade content will be part of the upcoming Xplora premium content, providing additional service revenues. Lastly here, I would like to bring up Xplora Pay, which is our upcoming Fintech solution, and it's all about teaching children the value of money as well as savings. From the Xplora 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 Xplora branded. Slightly later, you can even use the Xplora watches with tap-and-pay solution. We are super excited to launch the services in our two biggest markets, in Norway and in Germany, during the third quarter. As you can see, we're building a very highly scalable business model.
As you can see on the screen with the four various section. The smartwatches already have a huge organic growth in sales, delivering also good margin. 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. We will then also introduce our premium services from Goplay Arcade and additional premium content and Fintech content starting in second half. 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. 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.
A range of new services, including Xplora Connect, Xplora Arcade, and Xplor Pay, is ready to be rolled out consecutively throughout the second half of this year. The company, as Mikael mentioned, also have a very strong financial base with NOK 144 million in cash. We do expect the third quarter to extend the sales volume from this quarter in Q2. With that, we'll now move into the Q&A section. Okay. 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. Yeah, I actually have a question here, Sten. What is the status on your U.S. launch? How far have you come? What type of expectations do you have going forward?
All right. For the U.S. markets, the online channels already live and been for a little while. We see already our online Amazon channel, is already our second-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 U.S., and we're now prioritizing, given the size and opportunity in the U.S., we are prioritizing that to be the first market to enter with our global SIM solution, as mentioned in this presentation, also to enhance the user experience in the U.S. market, with our own SIM. We're ready to launch that proposition in Q3.
We have already finalized and signed off the first key distribution agreements, which is essential to go live and build with retail in the U.S. Currently, we are now focusing on closing the first major retail and telco agreements in the U.S. in order to scale as in phase III after our online launch. We have also finalized good agreements with partners such as 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 two players-three players in each of the various markets, although none of those still have the same depth in the portfolio and services as Xplora have. 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 million units over the next couple of years. Xplora will address roughly one-two of them going forward. 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. We are also seeing companies such as Vodafone, even having their own portfolio of IoT products, still are opening for Xplora product within their channels. It's also fair to say that Xplora have a very unique offering in this growing market, both in terms of types of product, eSIM, non-eSIM, voice or 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&A for the goodwill? Absolutely. Through the PPA from the acquisition of Xplora Mobile, we have a goodwill on our balance sheet of roughly NOK 175 million, and we have customer contract values of roughly NOK 70 million. They are depreciated on a linear basis over five years for goodwill and four years for customer contracts, respectively. Those are the policies applied. Yes, in large, our level of D&A will be at roughly this level, moderately increasing with further capitalized developments going forward. What is the supply situation for components? If any, 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 shipment throughout Q4 peak season. Currently, we can report that we have no red flag when it comes to units being shipped and delivered for 2021.
Good. There is a question about Xplora Connect. What are your expectations for Xplora 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 reason also why we purchased Xplora Mobile, the previous MVNO, and also one of the reason why we prioritized in Q2 the integration with Xplora 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 pre-bundled connectivity plan in the Nordic. We will deploy same strategy, same bundles across many markets in E.U. and U.S. 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 Xplora 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. 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 two to see. Once again, if you have any questions, please feel free to write them down in the Q&A section below the video feed. We'll try to answer as thorough as we can. No, I think that sums it up, Sten.
Yeah. Everything addressed in the presentation or within these questions. As always, feel free to reach out to Mikael or myself at any time. Also use our investor page, xplora.com/investor, to keep track with all the news we are releasing. We will wish you all a wonderful day and speak soon again.