Yes, hi and welcome everyone for the next presentation. My name is Daniel Thorsson, analyst at ABG, covering IT and technology companies. And the next presentation is with INVISIO and the head of IR, Michael Peterson. So feel free to present the company for us, and I have a couple of questions in the end.
Thanks, and thank you for inviting us here to this event today. I am Michael Peterson, as Daniel said, and I've been with the company for about six years. And I think this picture pretty much captures the story of INVISIO. Our users, that are police officers at football games, soldiers in the field, and recently also firefighters, they work in a very hostile and noisy environment. And we support them by enabling communication, crystal clear communication, and at the same time, we protect their hearing. And this means that they can work more effectively, and they can also, they run a lower risk of actually being killed in the worst-case scenario. And after, when they retire, the risk of long-life hearing damage is less with tinnitus, you know, so on. Let's see. Take some basic facts about our company. We celebrate 25 years this year. HQ is in Copenhagen.
It's the Silicon Valley of the hearing industry. I think two, three of the largest ones are based down there. So there's a lot of competence and expertise, which is very good for our recruiting. We also have a development center in London and a sales force, pretty big one, in the US, also in France, Italy, and in Thailand. We primarily serve military. About 85%-90% of our revenue is from different organizations, special forces, and the Green Army. But we also serve law enforcement. We have, for example, the entire Swedish police. So next time, if you go to a hockey game or a football game, you can go and ask the police what they think about our stuff. We have a scalable business model. That means that we only do two things. We develop products and we sell products.
All the manufacturing is done by European leading third-party manufacturers. This is good in many ways or favorable in many ways. First of all, we can tackle that volatility that we have in the industry, and we don't have any bottlenecks when it comes to ramping up the production. Den ska jag trycka på. 75-80% of our sales go through long-term contracts running from two to maybe 10-15 years. We are a growth company. Despite COVID, over the last five years, we have grown close to 30% annually with an EBIT margin exceeding 15%. One should keep in mind that we had a few bad quarters during COVID when we could not go out and visit our customers, and more or less sales to new customers stopped. I'm going to present our three product categories.
This is the personal system under the INVISIO brand that is used mainly by police officers, special forces, and also in the Green Army. As you can see, there's a headset up there to the left. It's an in-ear headset. It's like your AirPods, but more painful in the beginning, but it could also be an over-the-ear, you know, headset. Sorry. A cable goes down to the brain of the system where all the electronics are, and there you can maneuver what radio you want and if you want to do any changes of the settings. There are cables going down to the sound source. It could be two, three different radios, or it could be a PC or a telephone or whatever. A couple of years ago, we bought a company that is quite similar to us.
The main difference is that they target a different customer group, the ones that work for six, eight, ten hours in a tank or some other platform. And so they tackle this constant low-frequency noise that is very difficult to protect oneself from. The latest product category is our intercom system that enables users of the personal system to continue using it when they step into a vehicle. It could be a helicopter, it could be an armored troop transporter, or a RIB boat. It has three advantages. First of all, as I said, you can continue to communicate within the group and plan the next step of your mission. It also gives you access to the drivers and the fixed radios in the vehicle. And this is a product category that we believe strongly in. We think it's actually going to be bigger revenue-wise than the personal system.
Now we are expanding with various add-on products. We have announced this year two new add-on products. We are building a product family around this. I think I actually went out to press release from marketing early this week about we have added sort of a Wi-Fi function to it. One unique aspect of this offer is that it's built upon one platform. That means that old versions work with new versions. INVISIO branded products work with Racal Acoustics branded products. So it's interchangeable. It's like an ecosystem. It's also plug and play, something that is highly appreciated by our users that work in such difficult conditions. In every cable that goes from the control unit down to the radio has a data chip with presettings. So it makes it just plug and play and start use.
Taking a look at the market, here you can see the intercom system mounted in a helicopter, and it's actually mounted with Velcro because if you want to screw something into the helicopter, you need this much permission, so the customer themselves have actually solved it this way, and our market is a niche market. It's quite slow. Quite slow, yeah, that's true actually, because it takes a very long time from you have the initial talk to a customer until you get the order. It has quite high entry barriers, and it shows quite a lot of volatility. We have a handful of competitors. There are some global names like 3M Peltor, but there is also a second category. There are local companies that only do sales in their own country, and maybe in some cases, they're also supported by the government in order because they want local production.
In general, you can say the competition is there. There are markets with tougher competition. We have in-depth customer relationships. As I said earlier, it takes quite some time to get the customer. It's not unusual, two, three years from the initial talks. But the other side of the coin is that if you deliver what's expected of you, the customer stays with you for 10 plus years. And we, Racal Acoustics, who deliver to the vehicle sector, have had customers for over 20 years. Yeah, we have these procurement programs. As I said, about 80% of the sales goes through these public tenders that turn into framework agreement. If we then look on our drivers, we have or we experience a structural growth as there is an ongoing digitalization trend within our customer segments. Many armies are today using radios that are 30, 40 years old.
Today, a modern soldier is expected to be able to handle videos, photos, maps, and so on. These old radios can't tackle that or solve that. There is a general need to update all the radios out there. Also, more and more soldiers are equipped with a personal or individual radio. If you look at the special forces, we have the majority of the special forces in Europe and the U.S., they have an individual radio, making it easier to communicate, share information, etc. If you look at the Green Army, the regular army, maybe one out of 10 has a radio. It's quite surprising that I bet that everyone in here has a cell phone, but only one out of 10 has a radio in the army. They rely upon hand signals still. This is slowly changing.
There is also a greater awareness of the consequences of hearing damage. For example, the Swedish police has become a customer to us just because of these environmental aspects, working environmental aspects. There have been quite a few lawsuits in the U.K. and the U.S. where soldiers that came home from Afghanistan and Iraq are suing their employer as they were not supplied with proper hearing protection, and it's quite costly, these trials, but there is also the personal consequence, you know, with hearing damage. There can come many effects of that on the personal level, and at the same time, all the weapons are becoming more powerful, and vehicles are becoming more noisy, so this contributes, so these are our main growth drivers that we have had for the last 10 years, but then something happened.
Today, as a consequence of this war, we see that countries, especially in Europe, are ramping up their military spending. We have not seen that money yet, but we expect to see the consequences of it over the coming years. Some analysts, unnamed, ask us why, when the war stops, they will not buy anymore. But we and many other companies with the same customers think that this really is here to stay for 10, 15 years, independently. If the war stops tomorrow, it will have more or less very limited impact on the actual sales over the next coming years. How do we address this more active market? Yeah. As I said initially, we have two processes within INVISIO, two main processes. That is to develop products and to sell products. We spend about 15% of our revenues on product development.
That is probably more than the whole industry together. We have defined this as one of our key strategies in order to differentiate ourselves from our competitors. This is from the Copenhagen office with one of our new headsets. This achievement, we have for the last six years invested heavily in product development. The film team told me not to move so much, so I'd better stay here. In this picture, you can see some of our new products that we have announced or published or into the market over the last years. You have the Racal headset. This is a digital headset for tanks, for example. It's now conquering the U.S. as our main competitor has left the market there, actually. On the other side, you see the X7.
That is our second version of the in-ear headset that we have developed with the feedback from our customers. And in independent tests, it has shown outstanding performance. In a certain noise level, you can stay eight hours. The second best, the first runner-up, you can stay one hour. So there is nothing better on the market than that headset. And in the most extreme conditions, for example, in the U.K., they have developed a tank that is so noisy that with regular hearing protection, you're allowed to stay there less than an hour. But if you combine this headset with that headset, you can stay there much longer. And that shows one of the, how to say, one of our good things with our things, that they work together. The hear-through works together, works through these two headsets. It's a strength of the platform.
Yeah, so we have invested a lot, and we are investing a lot in product development. The other area for heavy investments has been the sales force. When I started, which will be six years this summer, we were about 100 people. Today, we're 250. In these 250, it's R&D people as well as sales people and administration. But the sales force has grown substantially. In 2017, 2018, we decided to set up an American sales force, which was a very wise decision as we have about 45% of our sales there. And it's much better for us to sell through our own channels. First of all, we have direct contact with the customer, but also our margins become better. And we don't only attend sales or trade shows with sales representatives. There are a lot of people from R&D.
And now, before the summer, there was a big trade show in Paris. We were there with more than 60 people. Have a quick look at the numbers so you get the feeling for where we are. The revenue in the last quarter was about SEK 350,000. The year-to-date revenue was SEK 1.2 billion, in line with last year's full-year result. The gross margin is slightly below where we wanted in this quarter. We had in the spring a large order where we also sold the radios, which has never happened before. But the customer wanted us to deliver the complete solution, including the radios. And for these radios, we got less than 10% gross margin. So it has sort of had an effect on our .... You can see for the full year last year, we were at 60%. We want to be at 60%, closing in on 65%.
The operating margin is 16%. Last year, it was close to 20%. Going forward, we think that sales will grow faster than OPEX, giving us some leverage. And we would like the EBIT margin to be 20% plus. And we don't think that's impossible. And lastly, the order book is a good indicator on where we stand and what we're going to deliver over the next quarters. About 75%-80% of this is delivered within two to three quarters. And at the moment, when we entered Q4, it stood in almost 900, if you're a little bit generous.
So where do we go from here?
Yeah. We have said that we want to achieve an average growth of 20% on a, yeah, in the long term. We have managed with that for the last five years.
We have an operating EBIT margin, or maybe I should explain this a little bit. It's a baseline. We want to exceed 15%. It's not reaching 15%. It's exceeding. And the background to this target is that in the early years, when the company was investing quite a lot and the numbers were not that attractive, one said to the investors that we would keep on investing, but we will not invest more than we can also deliver some sort of profit. And in every meeting, I get questions on where we stand on this target, if it shouldn't be changed, the definition or raised. We also have a generous dividend policy, given that we are quite a small company with heavy growth ambitions. Yes, how would... Now it's 20%. I told you I was going to be quick.
I think one of the main messages in my presentation is, we are faced with a market that over the next 10-15 years, we'll have a high activity level. What you see today in our figures are revenue generated by our traditional drivers. We have yet not seen any of the expected military spending, the increased military spending. We think that is next year, starting then. We also have some competitive advantages of being the global market leader that the customers tend to... They tend to want more speedy deliveries. They don't want to make too much changes. You can say that the procurement earlier was done for peacetime. Now it's more for reality or stay ready mode. So they don't... Yeah. They want a solution that is proven in battle. And that all our products are there.
So I think we are positioned in a very attractive position, given that we have invested heavily during the last five years. So by that, I... Yeah. Excellent, excellent, Michael. Thank you very much. That was a very good presentation, indeed. A couple of questions. In terms of geographies, the Americas and the big countries in Europe have been the largest regions for you. Where do you see the strongest demand at the moment? I think Europe is, of course, very active at the moment for obvious reasons. But we are also gaining pretty good traction in Southeast Asia, which was really hit bad by COVID. And we are attending quite a few trade shows down there. And we already have some of the special forces, parts of the Japanese police.
But I think what really differs us to other traditional companies is that you have to have much more patience because things don't happen that fast as it does in other industries. So that's one of the main differences you have to keep in mind. Yes.
And in terms of the growth rate, you said it was way higher than 20% last five years, but in the last three years, it's been about 35%, I think. What has been driven by volumes versus prices? Can you say something about that?
Yeah, sure, sure. I mean, almost everything is driven by volume. We have been able to compensate for the cost increases we have seen. But now in some areas, the cost of components have come down. So it's totally volume-driven. Yeah.
In that sense, also in the last three years, growing more than 35%, but also saying that you have not yet seen the favor of increased military budgets ahead. What gives you confidence in saying that? Are you sure that some customers have not prepaid any products or pre-purchased any products ahead of military budgets? No, I mean, there's no indication. I know that there are some analysts, no one mentions, thinks that we're going to have a flat 25%. But there are no indications that the demand will be lower next year. I would say, on the contrary, as we are pretty late in the cycle for procurement or military stuff, we think that this demand we see today, it will be added by the increased military spending.
That's very clear. Final question. You mentioned that you expect intercom system to exceed personal systems in the future.
How big are they today? Can you say something about sales? Intercom, you can say that
It's recently launched. It had sales last year for... It had its commercial breakthrough last year, you could say. And we had sales for plus 100 million SEK. And yeah, it's about 10% of the total turnover. Yeah. And personal systems is the majority of the group. Oh, yeah. The INVISIO branded is about roughly half of our turnover. And Racal is maybe 30%. And then we have law enforcement there also. Yeah. 10%.
Excellent. Time is flying. So that was the last question. Thank you very much, Michael. Thank you.