Good morning, everybody, and welcome to our presentation for the third quarter, which we have titled "Strong Sales and Order Intake." The highlights are that our revenues increased by 40% in Q3 and by 28% in the first nine months of the year, driven partly from a clear recovery in the U.S., where we saw a little weaker demand in the first half of the year, but has now normalized.
During the quarter, we also signed a new long-term agreement with the Canadian Armed Forces that we believe will contribute to revenues for many years going forward. We continue to see that the defense modernization and digitalization trends will support our long-term demand for the INVISIO advanced tactical communication solutions. Turning to revenues, as I said, the recovery in the U.S. supports our revenue growth. Our revenues increased by 40% to SEK 408 million against SEK 291 million the year before.
In North America, it was SEK 133 million against SEK 85 million, so a good increase there. For the nine months period, the increase was 28%, reaching SEK 1.35 billion. This was strong sales across all of our markets and also across all of our major product platforms. We saw a continued good demand for our new products, especially the T30 headset. Deliveries are still somewhat limited due to the ramp-up that we are doing for this new product still. On the order intake side, we saw an increase of 18%, and actually, this is the highest level we have ever seen for a third quarter in company history. We reached SEK 566 million, and again, the U.S. customer activity recovered following the first half that was a bit weaker.
We also think that this is in line with what we said before, that the earlier weakness was only postponed purchases rather than weaker underlying demand, and this is also in line with what we have seen in previous years. As said many times, our business is volatile and fluctuates greatly between quarters for the different geographies where we operate. The order intake will, of course, support our revenue generation in the coming quarters. The order book was SEK 650 million at quarter end, a little lower than last year at the same time. I would say, though, that we are having a major focus on trying to convert order book to deliveries as fast as we can, but always in line with customer expectations and demands.
We are in very close dialogue with customers, and very often we actually plan manufacturing and deliveries well ahead of receiving the orders. When we know that a certain customer has a demand and is very likely to place an order with us, we will commence preparation for components and manufacturing so that we can deliver with a short notice. You might have heard from other companies that sometimes the defense organizations are complaining at this point in time about long lead times for military and defense-related products. This is not the case for us. We are very capable of delivering with a very short timeframe, and that is a hallmark of how we operate. That is also why we constantly keep a very decent inventory of both components and finished goods.
On the margin side, our gross profit increased by almost 40% to SEK 228 million, and our gross margin was 56%, 1% lower than last year. I have received a few comments regarding product margin, gross margin, so I will try just to address that a little bit more in detail. Our margin was, as a starting point, a little above 60%, and then there was a few things taking it down a notch. Tariffs is still present for some of our products, not all that we import into the U.S., but products that are for law enforcement and safety and firefighters are subject to tariffs, and that affected us with about 1%. Customer mix is something we have talked about many times because we do sell in many different ways.
Most of our sales goes direct to users and customers, but we also, as we are growing as a company, have a lot of partners. These are vehicle manufacturers, these are system integrators, these are radio manufacturers, and these are distributors of our products to law enforcement, for instance. All of these channels have different margin outlook, and also depending on what type of product we are selling to that customer. That will continue to fluctuate a little bit, and the total mix in a quarter of who we are selling to will have some impact on the gross margin. In this quarter, we estimate that the customer mix was about 1.5%. The third thing that we mentioned this quarter is electronic components.
You might have seen from other companies, also tech companies in general, and defense companies and others, that they are talking about some longer lead times on components. For us, it is not a big issue, but we like to be able to deliver fast, and that is why we are trying to secure components well in advance so we have enough for coming quarters' delivery, so we do not end up in a situation with delays in deliveries. That is why we are putting more components into inventory upfront to be able to match the expected deliveries longer term. In this quarter, this has affected the gross margin with about 1.5 percentage points. I would also like to say that the lifetime of INVISIO products are normally quite long.
We are talking, or the platforms we have, that we have developed, they have a long life in the market of between five to 10 years, often when we have a contract with a customer. The components that we use, many of them are standard electronic components that are also used by consumer electronic companies and others, and it means that sometimes these components does not live as long as our platforms. This is something we handle quite normally, and we can do two things. Either we can redesign the product a little bit to accommodate for a next generation of components, or we can buy components of the existing sort and have them in inventory for the remainder of the lifetime of the product portfolio. Sometimes we do redesign, sometimes we buy components.
In this quarter, we just decided to buy more components so we have enough for duration of a certain product platform. There is nothing strange with that. This is how we have always operated. Turning to our expenses, operating expenses. These have been broadly unchanged over the past three quarters. Year-on-year, we are up 16%, and that is all in line with our long-term growth strategy. Again, we are still seeing very high activity levels on the sales side, and we are continuing to add resources in certain areas for the sales side, but also in R&D and in operations, as in AI, IT, as we will get back to. Profitability year-on-year improved. EBIT margin up to 8% from a small loss last year. The EBITDA margin increased to 12.7%, and the higher sales revenue levels and a relatively stable cost base supported this profitability.
As you might recall, we, not so long ago, increased our EBIT margin target from 15% to 20%, and in looking at the rolling 12 months EBIT margin, we are now at 18.4%, so somewhere in the middle of the old target and the new target. The new target of 20% over time, of course, remains. Inventory, as I said, we are aligning our inventory with expected future demand. As you will see, we increased our inventory somewhat. Some of it is also related to components, as we talked about, components that will be consumed at a later stage that we are now holding in inventory for future deliveries. But we are also ramping up on certain other products in anticipation of orders and deliveries into Q4 and 2027.
This is how we operate, and we, as I said, still believe that the ability to react fast to customer demands is a very highly appreciated way of operating that INVISIO has and where very few in our industry can match us. We see a continued positive cash generation, and the year-on-year decrease that we saw in this quarter mainly reflected the timing of invoicing and customer payments. Not much to report there. Turning into, again, some of the major activities during the quarter. As said, we received a multi-year contract with the Canadian Armed Forces through a local Canadian partner for a broader tactical hearing protection and communication systems, and it covers the entire Canadian Armed Forces, land, marine, and air force. It is initially a two-year term with an optional of three years extension, and the potential value is up to SEK 450 million.
It is a traditional framework agreement, meaning that no orders are guaranteed, but we expect to see the first orders from this contract very shortly. We continue to develop and see a high interest for our types of products, and especially the fact that we are able to offer complete systems that operate both on land but also in vehicles. We had a high level of activity in the U.S. at the recent AUSA trade show in Washington, D.C. in October. We see a high focus on modernization and operational effectiveness, both in the U.S. and also in the rest of the world. There is a highly growing interest in integrated soldier systems and connected capabilities where INVISIO can play a very important role for that purpose. During the quarter, we have also appointed a new member of our group management.
Alan Hunter has been named new Chief Information Officer and will be responsible for leading INVISIO Group's digital agenda. I think everyone knows that there is a continued high need for strengthening IT security and business resilience in general. But at INVISIO, we are also very convinced that the use of AI and automation is going to have a huge positive effect, possibly on our business going forward in terms of both innovation and productivity throughout the entire business, and being able to enhance the digital support for growth.
We are sure we have found a very capable person here. Alan has more than 25 years of experience in IT strategy, governance, and digital transformation, AI. He has worked with a number of large multinational companies in many different industries and will bring very valuable experience to INVISIO. And he will join INVISIO on December 1st.
In summary for Q3, we continue to see favorable market conditions supported by strong European demand and the U.S. recovery. I would like to say again, reiterate, that in many countries, it is still some of the basic demands that are highest on the agenda, air defense, air defense, and air defense. And the types of products that we supply is a little later in the circle on the purchasing line in certain countries. In others, we are top of the agenda, but in others, it takes a little longer. And that is, I think, the normal evolution that we will see throughout the rearmament of especially Europe that we are seeing currently. We see that the networked military and public safety operations are making secure tactical communications even more mission-critical. It is really an important part of how both military and public safety will operate going forward.
There is a shift towards integrated and interoperable solutions instead of single product solutions. INVISIO, with our broad portfolio, our products are very well placed to capture these opportunities with our portfolio of products that continues to grow, but also with the close customer relationships we have and the scalable operating platform we have with our capabilities for deliveries. With that concludes the presentation of the quarter, and we are now open for questions, please.
If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Adrian Elmlund from Nordea. Please go ahead.
Hi, Lars and Thomas. Good morning. I have two questions. Firstly, regarding the gross margin, could you perhaps talk us through the three factors behind the weak gross margins here and how do you expect these to develop forward?
Hi, Adrian. Again, the tariffs is something that is, of course, outside our control. As I said, it is only a part of our business that is affected. It is very hard for us to predict how that will continue, also after the elections coming up and whatnot. I think that's hard for me to estimate. When it comes to the sales mix, that is across our geographies, of course, and of course, it's also across the different sales opportunities. As the market is evolving and INVISIO is getting a larger company, we also get into other types of agreements with new vehicle manufacturers, with new system integrators, and we are part of larger systems. Each new opportunity that we look at will imply certain margins for us and volumes and so on.
I think these are very attractive opportunities for us, but it's hard for us in advance to estimate exactly where the gross margin will land. These are down to individual negotiations per project when we work like that. It is hard to say. I would say that the underlying gross margin for INVISIO products is still very strong. Every time we announce new products, we can see that the profit margin or gross margin on the products will be evolving over the first six to nine months in a positive way. The same thing I've said for our new product platform, the T30, that for the first six months when we start manufacturing, we always have a lower gross margin until we get up in speed and we get up in volume. We see that every time we have a new product platform.
I expect the gross margin to be very good going forward, but I cannot put a number on because again, tariffs is outside our control, and so is also the mix of customers. We still maintain an internal target of a gross margin above 60%, but it's not an external financial target.
Right. Fair enough. One thing I guess I could push you on is regarding the electronics components. How long does it take for you to pass higher input costs onto customers?
It is not necessarily higher input cost on the longer scale. Of course, if it is related to inflation and higher prices, then we have the opportunity over time to address it through higher prices. That we, of course, also will do if it is a thing that continues.
Okay. Second question here. The performance in North America, good in the quarter, but could you say anything regarding what drove the performance? Is this Coast Guard, or have you started to see any volumes from Bose, or is it anything else that is driving it?
It is mostly our soldier systems, our headsets, our control units, our cables, and also our intercom systems, the standard ones. Also some sales related to the regular portfolio is picking up now, so that is looking better. We still think we are in a very good position and that the inventory of existing Bose products will fade and is fading as we speak. So, it has been a broad selection of customers buying a broader part of our portfolio in the U.S.
Okay. Thank you, Lars.
You are welcome.
The next question comes from Jacob Andersson from Danske Bank. Please go ahead.
Good morning, Lars and Thomas. Just going back to the components there. You described the higher components cost as temporary and necessary to secure the future deliveries. But are these costs really temporary, or will they continue to weigh on margins going forward when you are purchasing in the future?
I think they are temporary, but if they are not, as I just said, we will, of course, as we do with all types of inflations and higher cost, we will be increasing the product pricing to compensate. I think all companies do that, so that is also part of how we operate. But sometimes we are, as I said, securing components for a longer period of time, also to make sure that we do not have to do modification on existing products. Then it is sometimes cheaper for us just to secure more of the older components, so to speak. So, I would call it temporary for now if we see a continuation. We, of course, also trying to see what other companies are saying. I think, as I said, many tech companies are reporting some delays on certain types of components, and we haven't really seen that.
We have been able to secure what we need, but we are following the situation. Again, like with previous high jumps in inflation, we are able to increase pricing as well over time.
Yeah, okay. Fair enough. Could you provide more details on the customer mix here in Q3? Were there any temporary low-margin deliveries or donation orders that we have seen before?
No.
Should we expect the customer mix to affect the gross margins, okay, in the coming quarters?
I don't know how much it will affect the gross margin, but I will just say that the fact that we sell to many more types of partners will continue, and we are very proud of that we are now selling to the large vehicle manufacturers, that we are selling to the radio manufacturers, we are selling to the system integrators. That's the strength. And of course, in many of these cases, if a large system integrator comes to us and say, "Hey, INVISIO, we have an opportunity in this country. We would like you to be part of that, and we would buy your products and include in a large solution." This would be a sale that we could not do on our own, where we are working with that partner.
It would be, even though it has a 1% or 2% lower gross margin, it would be very strange to walk away from that business because it's a business we couldn't get on our own.
Yeah. That makes sense. And just also, were there any one-off effects in OpEx during the quarter? And also perhaps say what proportion of your employees that are based in the U.S. right now?
We have around 40 people in the U.S., so that's a little more than 10%.
Okay. Then perhaps the last one here. You mentioned that the order intake will take longer than usual to convert into sales. What is driving the longer conversion time? You also said that 80% of the current order book will convert into sales over the next two and three quarters here. Could you give us a bit more color on that?
I don't think I said that they would take longer. In that case, I said something wrong. I didn't say that the order conversion would take longer. I said that normally we do it as fast as we can, but we always do it in the way that customers want to, because many of our products need training and handout to individuals. Therefore, there's always a process of organization, logistics with our customers in terms of delivery. Even if we are physically able to deliver something in a certain quarter, it is not sure that the customer wants it in that quarter because there are logistical arrangements that needs to take place. We are not seeing any delay.
I think I said that the order book was a little lower than the same period last year because we have been shipping faster and converting the order book faster this year.
Yeah. Okay. Thank you. No more questions for me.
Thank you.
The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead.
Yes. Thank you very much. I have a question on the inventory. It hits above SEK 400 million here for the first time, representing historically higher of the outgoing order book as well. Is this a risk that there are old components or products in the inventory that haven't been shipped or may not be sold?
No. Absolutely not. This is all forward-looking, and I think after having an inventory model for the last 15 years, we know very well how to handle this. Of course, we are also lucky enough to be in an industry that is not fashion-driven, so we only have two colors, and the products are not getting out of fashion. So we normally have very little write-down on inventories at the end of the year. When we do, it's normally because of IFRS, where after one year in inventory, we need to, but that doesn't mean that we can't sell it. So, I think this reflects more the fact that we are looking at sales opportunities coming into next year, but also that some of the products we are manufacturing now have a higher individual cost per unit than previously.
For instance, an INVISIO Intercom system is a lot more expensive than a headset, and that also drives certain inventory. Then again, also that part of, significant part of the inventory is components and semi-finished products that we can quickly turn into ready products.
Okay, perfect. That is clear. The other question here, is the current order book U.S. or European tilted, if you were to estimate split roughly?
We do not disclose that, but I think it is very close to the sales split. There is no tilt at this point, as you call it, as far as I recall.
Okay, clear. Then final one, what was the share of sales coming from INVISIO T30 headset here in Q3? Is it significant at all?
It is not significant from a revenue point of view. We have shipped in the thousands, but we are still in a ramp-up phase, and I think that will continue all the way into 2027, and hopefully onwards as volumes grow. So it is a controlled growth. We are shipping in the thousands every month.
Okay, perfect. Thank you very much.
You are welcome.
The next question comes from Yiwei Zhou from SEB. Please go ahead.
Hi, Lars. Thank you for taking my questions. I have three. Firstly, just follow up on the gross margin. You mentioned the tariff impact, but many companies also receive the refunds offsetting the payments. Has INVISIO received any in the quarter, or we should expect the refunds will come through in the coming quarters?
Yes, we have received some refund for previous tariffs, but there is quite a time lag between paying tariffs and then possibly getting some payments back. So in this quarter, we are booking the payments that we made. Whether we will be able to get a refund, time will tell.
Can you maybe more specific on the, if we adjust for the, or include the refunds, what would be the margin impact here? I mean, the net-
In this quarter, you mean?
Yeah.
I mean, it's 1% that we have put in as an effect in this quarter. If we get that refund back, then that 1% will come back, which is 1% of SEK 400 million, so it's about SEK 4 million in this quarter.
Okay, so this is a one percentage point margin impact that is exclude the tariff refund received.
Yes. Yes.
Okay. Thanks. Clear. Also on the gross margin, when do you expect to have the visibility to consider the component cost inflation be permanent and then to drive you increase sales price?
We have a process internally where we, once or twice a year, can adjust our pricing depending on general developments in component pricing and inflation and other things. We normally do that in Q4 and in the middle of the year. We will be reviewing that during Q4 and then implementing whatever changes we need to do from January 2027.
Okay, thanks. My second question regarding U.S., is it possible for you to talk about the order intake received from the market quarter?
Yeah, not more than it has been across quite a number of different types of customers. Also, majority of it has been related to our soldier systems, our headsets X7, T7, some T30, our control units, cables. There has also been quite a few medium-sized orders related to our standard INVISIO Intercom solutions and some orders related to the Racal solutions. It has been quite broad.
Okay. Can you give an update on this US Coast Guard contract, and is it still your expectation that the large order would be before the year ends?
I would say the contract is still in place. As we have said a couple of times, we were quite heavily affected in Coast Guard because it is part of Homeland Security during the shutdown. It has taken a bit longer than normal to get back on track. But we do expect to see good significant orders from this contract, and we also expect the contract to go forward for the next 10 years. It is really a solution that we have been working on for a long time with the Coast Guard and that they really need. So, it just takes time. Whether we will receive the first order now in Q4 or it is pushed into Q1, I do not know at this point in time.
But again, it is a long-term project that also requires quite a bit of logistics because the boat needs to get in, and there has to be plans for how to put the system in place and so on. So, there are many components here that needs to be coordinated.
Okay, thanks. Last question. Sweden seems to remain quite strong, not as the Q2 level, but as compared to last year, it seems the activity has a step up. Can you maybe elaborate a bit on the dynamics here? Do you have more contracts or long-term contracts or more customers? What is the dynamics behind it?
Yeah, what I can say, it is alluding to what I have said before, that we are working different markets in many different ways. Apart from selling direct, as we do in Sweden, some of it, some of it is also related to working with the vehicle manufacturers, system integrators, and others who has a business in Sweden where we are part of the total package. So, Sweden is a strong home market for us, as all Scandinavian countries, and we have seen a good development this year, and we think we are able to also to replicate that into other markets. It is a mix of selling direct and selling with very large key partners.
Okay, thanks. If I may ask you in another context about the geopolitical tensions and the impact. We know that Sweden, for example, and also some other countries here in Nordics and Western Europe has been a main user of 3M Peltor, the ComTac over the years, and based in our dialogue with the customers, is the 3M Peltor perceived as a U.S. brand or it is the European brand? Because we know that originally it was acquired from a Swedish company. Have you seen any sort of the trend supporting that the modern brands like INVISIO and Peltor, the European brands, the companies?
I would not be able to say so. I think I don't have a perception of whether customers think that Peltor is a U.S. or European company. I think also for INVISIO, I think most of our customers don't care too much, and probably not all of them would know either whether we are in the U.S. or we are in Europe. We are more known for the product quality and the product solutions we offer. So, I don't think there has been any issues with it either. If that was your question. I think, again, we are in a niche market where it is really about performance, giving people a really, really good ability to communicate in harsh environments and also at the same time protecting their hearing. So the performance is the absolute most important part, not exact geography.
Okay. Thanks for the clarification. I'll jump back to you.
You're welcome.
The next question comes from William Balksten from SB1 Markets. Please go ahead.
Hi, Lars and Thomas. Thank you for taking my question. I believe most of my questions have been answered already, so just a few follow-ups. First here on Q4, with order book somewhat lower than last year, how much of the Q3 order do you expect to deliver in Q4, and is it fair to assume that Q4 will again be your strongest quarter of the year?
Hi, William. It is too early to say, and as you know, we do not guide for coming quarters as our business is volatile. The order book, I would say potentially we could deliver majority of it, and we probably also will. But again, it is back to whether the customer actually want delivery in the quarter or not. We will also be receiving orders during Q4 that we can turn quickly into deliveries with the inventory situation that we have. But I do not know at this point in time what Q4 will be more than based on the order book that we already have. As usual, we are working on many different things. The pipeline is very large, but the timing is unknown, and certain things that we expect to receive in Q4 could also be pushed into Q1.
It has been like that for 15 years, so it is very hard to say where we end. But I think the first three quarters, so far so good, and the last 12 months rolling revenues have now surpassed SEK 2 billion, with a 24% year-on-year growth. So we are pleased with that so far. But again, we look at it at a little longer scale than just one quarter.
Yes, that is very clear. Finally, just here on OpEx, it has been really flat for three quarters now. Just how should we think about OpEx growth next year, and is something like 10%-15% a reasonable range, or how do you see it growing?
Yeah, I mean, when we are now looking into 2027 and preparing our internal budgets, we are of course starting with the pipeline that we have and our own estimates for how that pipeline can turn into orders during 2027. Then we are looking at what organization do we need to support that order intake from a sales point of view, from an operations point of view, and R&D, and finance, and everything else, and then we come to that number. So it is a bit too early for me to say. I think what we have said more general is that over time, we expect the revenues growth to be higher than the growth in OpEx. With the scalability we have in our business model, with all of our external manufacturing partners, we are able to increase our revenues faster and more than our OpEx.
I think that is the answer I can give you.
Yep. All right. Just a quick follow-up here. Where will most of the additional OpEx go? Is it mainly R&D or mainly sales?
It is a little bit everywhere because, of course, sometimes we see activities in a region, in a geography, or in a country that means that we will need to add more salespeople or resources to look at that. Sometimes it is also a new program, a tender, or something that comes up where we, for a period of time, needs to have more focus in R&D. Then at the end of the day, we of course need to make sure that we can handle the order intake and the logistical support in operations and so forth. So it is a little bit everywhere, but everything starts with the sales pipeline and what we see from a sales and order intake and sales perspective.
All right. Thanks. I will jump back.
Thank you.
The next question comes from Hjalmar Ahlberg from Redeye. Please go ahead.
Thank you. Maybe one more try on the gross margin there. I mean, you mentioned customer mix, that you see more deals from partners. Do you think it is a fair assumption that maybe the best case is that the actual achieved gross margin could be slightly below 60% than above 60% for the near term?
I think what you have to remember also is that one of the developments we have seen in INVISIO over time is that sales prices is one thing, but the other thing is our internal cost level in manufacturing, and that always goes up with higher volumes. But it is always the sales comes first, and then the efficiency comes afterwards. One of the first programs we had, we won 10 years ago. I will not mention the country, but in that contract, our gross margin, when we started that contract, the gross margin was 37%, I think. And because of the volume, after nine months, our gross margin was almost 60% just from increased internal efficiency in manufacturing.
Some of these new orders or partnerships or things we work with right now where we get an order, initially, we might have a little lower gross margin because the volumes are not that high, but we will get to a better gross margin over time because of volume. And the same, I would like to say again for T30, when we launch a new product like that, in the first six to nine months, the gross margin is a little lower until we get fully up to speed and we obtain the economies of scale. And then after that, it is a lot higher than the initial. That is just the nature of how these products are introduced into manufacturing.
Okay, understood. That is helpful. Also looking into Q4, I do not know if you have any good answers to this, but do you see, I mean, looking at your customers, do you see that they have large budgets that they have not spent for the year, any indication that there could be some kind of, yeah, potential for orders coming late in the year?
There's always potential. I think, of course, when we look at the Q4 last year, we had a couple of large orders released. Whether we will get that this year, I don't know. At this point, the pipeline is there, and whether we will get it or whether some of it will be pushed into Q1 or next year, we simply don't know at this point in time. We, of course, also know that a lot of money is being spent for rearmament in many European countries, but also that a lot of money is going towards support of Ukraine with some of the basic needs that they have. So, whether money is left at the end of the year, we will not know until very late in this quarter, I think. We simply have to wait and see.
Understood. Curious about pipeline of new products in maybe 2027. Do you think it will be a year where you ramp up the products you launched in 2026, or do you also see new products potentially impacting sales or orders in 2027 as well?
Yeah, we always have new products in the pipeline. Whether they will impact significantly in 2027, I don't know. I think the main impact in 2027 will be from what we see now. It is from the INVISIO T30, but it's also from INVISIO X7 headset that we launched a little over a year ago that is actually now doing really well, and with good margins, and it's up and running and manufacturing in full speed. It's from the INVISIO Intercom, it's from the wireless INVISIO Intercom, and we will also see, I'm sure, good orders coming towards the Racal portfolio.
All right. Thank you very much.
You are welcome.
The next question comes from Finn Kemper from Cantor Fitzgerald. Please go ahead.
Hello. Hi, Thomas. Thanks for taking my question. Maybe one more thing on OPEX. I mean, you said that there is some sort of flexibility already. But maybe looking into 2027 and 2028, and also the ramp of the T30, do you think where we currently sit is a good base already? Because looking at the past three quarters, we are pretty much flat on OPEX, or is there potential to, yeah, for a steep increase?
Hi, Finn. Yeah, I do not think we will see a steep increase. I think we will see an evolution. As we grow, we are mindful of several things. First of all, it is also a strain on the organization to take on many new colleagues every year. So, we have a good formalized process for that, but we are very careful to make sure that everyone we get on board, that we can handle it in a good way, and that everyone gets up to efficiency as soon as possible. But of course, as I said, it is activity-driven. So, if we see areas or needs, could also be new development projects where we get involved with something with customers, where we just see a need for increased R&D resources, then we will, of course, do that. But I think it is an evolution.
You are not going to see a revolution in the OpEx.
All right, understood. On the Canadian contract, I mean, first of all, congratulations on that one. With the local partnership, can you give us a feeling of how the margin of that kind of setup compares with you selling directly, and now also with the U.K. and U.S. scaling up? How should we think about partner-led business?
I think the reason for using a local partner are many. First of all, of course, they are often very well established in the local market. They have been there for more than 25 years, and they know the sales channels very well. Also, they add a lot of value in terms of not only logistics, but also training and service and support and other things. If we did not have them, then our own operating expenses would be higher. You can say that
Okay
the amount that it will reduce potentially our gross margin in a certain deal, if it did not, then it would have increased our operating expenses instead, because then we would need to have more people locally to support it. It is a way of operating. It is also, I think, in at least some countries now, there is a requirement to have local partners involved because it is government money that is being spent, and most governments would like to see some of that money also being spent in their own country. I think there are many advantages for using this with local strong partners. It is not in all countries, but in certain countries, like Canada, it is a big help for us.
Okay, makes sense. Maybe one last one on orders. I mean, Q3 looked great in terms of order intake. How much of that was the U.S. catching up? Because you said that there were some delays in H1. How much of that is purely new demand?
Ooh, I haven't done that calculation. I think looking over, it was probably SEK 50 million-SEK 70 million that was catching up, something in that ballpark.
Okay. Okay, perfect. Helpful. Thank you.
You're welcome.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Jacob Andersson from Danske Bank. Please go ahead.
Hi, Lars. Just one last question here. Recently, we saw a framework agreement between the Danish Defense and Thales regarding their SOTAS intercom, but could you clarify whether Thales is a competitor or partner, and perhaps elaborate just a little bit on that relationship?
I would say Thales is a very strong partner. We have a very long-term relationship with Thales, and some of you might know that Thales also used to be the owners of Racal back in the day. So, especially on the Racal side, the relationship with Thales is strong, but it also goes for the INVISIO brand. That is one of our good, strong partners for sales of our products. Some others have asked about the SOTAS contract. Denmark has been buying SOTAS for many years, and we have different ways of benefiting from deals like that. First of all, the Racal headset solutions are preferred solutions for SOTAS. Thales is also reselling Racal products for their SOTAS system. Secondly, not only in Denmark but also elsewhere, we have an opportunity to use our intercom as an addition to the Thales SOTAS system.
Where the SOTAS system is the installed system for the drivers in the vehicle, we have an opportunity to put INVISIO Intercoms at the back of the vehicle for the people being transported in a certain vehicle.
Okay. Perfect. Thank you.
There are no more questions at this time, so I hand the conference back to the President and CEO, Lars Højgård Hansen, for any closing comments.
All right. Thank you, everyone, very much for attending this call and for your high interest in INVISIO. We appreciate that. Look forward to speaking to you again after our Q4 and full-year results in February. Thank you.