Thank you very much. Welcome to our call. The main message for our Q3 report is a strong order intake and continued investments in both sales and R&D. We saw a strong order intake and a stable sales growth during the quarter. We also saw some delays or postponements in larger programs as a consequence of the ongoing pandemic. We are convinced that at some point in time, the world will get back to normal. Therefore, we continue to invest in important areas of our business, because we believe that the long-term need for good hearing protection and communication in noisy environments is not going to either decrease or go away. Let's look at the numbers on page four.
Our revenue during the quarter was 9% up, and if we count for currency, it was 14% up compared to last year, standing at SEK 119 million. For the first nine months of the year, we have an increase of 15% compared to last year. What was a little lower this month was our gross margin at 50% compared to 57% last year, and we now are at about 57%, 58% for the first nine months. I would like just to put a few comments onto that. As we have said, I think very precise and consequently over the previous quarters and years, we believe that our own portfolio of headsets, control units, cables, intercom, will be able to sustain a gross margin of somewhere between 60% and 65%, and we have been also at that level for the full year 2019.
Our own developed products is the core of our business, and we have a healthy gross margin for those. What is happening is that INVISIO is also more and more seen as a system integrator, a one-stop shop, if you like. Many of our customers see us as the hearing protection expert, the headset expert, and whatever need they have, whatever legacy product they might have, they come to us and say, "Can you also help us integrate this? Could you help us with a few units of that?" So forth. When we do that, we are a little bit acting as a reseller. We resell other people's solutions. We sometimes also have to make cables with very expensive connectors or legacy cables that are difficult to get a hold of.
For these types of what we call third-party products, we are seeing a gross margin of somewhere between 30% and 35%. These are products we don't spend any development time on. We resell them and we integrate them to our system. In certain quarters, which also happened in 2019, we do sell considerable amounts of these types of products with a lower margin. It doesn't mean that suddenly our gross margin is going in the wrong direction. It's just a matter of the combination of our own products and certain third-party products. For us, the margin money is important, and the gross margin, as long as we have full control of our own products, it is fine that we also sell third-party products with a lower margin. That's the explanation for this.
In combination, of course, also, we are a little affected also by the currency decline in the quarter that affected our revenue and also, of course, our gross margin. When we then look at the operating margin, it is subsequently also lower because the gross margin is lower for the quarter. The operating margin is, of course, also influenced by our OPEX level, which is stable. We have two, you can say, directions for the OPEX. Our number of hirings have still increased. We have more people, which has increased the OPEX. On the other hand, due to the pandemic, we are not able to travel. We are not able to go to trade shows and so on, we are saving money on that account. These are the highlights regarding the numbers.
As I said, the order intake was very strong, SEK 212 million. This is actually the second strongest quarter in the history of the company in terms of order intake. Turning to page five, we will just pass that quickly. That's just the usual update on our development in sales on the left-hand side compared to previous years and also in the EBIT compared to previous years. Not so much to comment there. On page six, we also have our usual slide of following the order intake and sales and showing the fluctuations between the quarters. On the sales side, on the left-hand side, you can see our actual sales per quarter, but also the rolling 12 months average, which is having a good positive trend.
On the right-hand side, you can see the development in order intake and the good result we had in Q3 on order intake. The order intake, as we tried to explain in the financial report is, of course, a consequence of the growing market position that we have in all parts of the world. A few years back, INVISIO was relying on a smaller number of customers. We were also relying on larger programs. In 2020, we only announced one large program in Q3, or large order, which was $44 million from a customer in the U.S. Apart from that, the rest of the order intake are a combination of new orders from new customers, follow-up orders from existing customers. They are spread across geographies, and they are also spread across military customers, law enforcement customers, and some orders for our new intercom system.
It's a much healthier mix of customers, if you like. Again, we think this is a natural evolution due to the fact that we are a larger company, and we are much more present in many parts of the world and with many more customers. It's all good. Okay. Page seven. As I said, we did get one large order from an existing customer in the U.S. This was placed through our U.S. contract, so-called GSA contract. Again, this is from an existing customer, so it's a follow-up. They're going to expand to more users, and we expect the deliveries to take place in 2020, so in the fourth quarter. On page eight, even though we are restricted from travel and going to trade shows, we continue to see a very high interest in our new intercom system.
We have been able to go and visit certain customers and show them our intercom. It is very clear that the concept of the intercom is immediately understood. It is something that, I would say, almost everybody we meet see the need for. We have also already seen, I would say, good interest and also a number of smaller orders. In the third quarter, we had another three, four small orders from special forces in U.S. and in Europe.
One of these were the U.S. Army's second Security Force Assistance Brigade, SFAB, that has been a customer of ours for a long time. They are now embracing this new technology with the intercom system. It's a good reference for us both in the U.S. and in Europe. I would say that despite the current pandemic, we are doing well on the intercom.
As we've said also previously, we expect to see smaller orders during 2020 and hopefully some increasing orders during 2021 and onwards. There's no doubt that this little smart portable system is very well understood, and it will be a very important part of the INVISIO solution going forward. On page nine, as we've also said many times, we invest a lot in R&D and in our sales and marketing. During the quarter, we introduced our new over-the-ear headset called INVISIO T7. Traditionally, INVISIO has been the market leader in in-ear solutions and control units and cables. We can of course see that there is a very interesting market for over-ear headsets as well.
Actually, many of our customers are telling us that they would actually like to have more than one headset, depending on what type of activity they have to do and which part of the world they're going to and so on. This is, to some extent, going to be additional sales to many of our existing customer. As always, when we launch new products, we will have competitive advantages, and we will have technological advances. On the T7, there's a number of new innovations. This is the first submersible over-the-ear headset, and you can actually jump from an aircraft at 10 kilometers height and go directly into water and down to 10 meters underwater. It can be used underwater down to 10 meters, and it is very unique in that capacity. It is also unique in a number of other ways.
It has three different wearing styles that you can exchange between without used tools. It has also a very high level of comfort with some patent-pending 3D cushions that we have developed internally. Also it has a fantastic audio, what we call INVISIO Audio, because it is connected and part of our control units and part of our personal. Everything around sound quality, situational awareness is top-notch in this one. Again, this is a headset that has been, during the development process, we've had customers involved. We expect this to be a winner in the market for INVISIO and will help us advance our market position. During the quarter, we have already received the first orders in the hundreds for the INVISIO T7 headset. This is going to be an important part of our portfolio going forward.
On page 10, as I said, we also work with other companies when there is a market need and a requirement for something that we do not necessarily have in our portfolio at this time. An example of that is a Danish audio company called N-ear that has developed, as you can see on the picture, a very discreet audio tube that is intended for listening.
When users are in a situation where they need to be very discreet and they need to listen only and be on an important activity, then this is a very good solution. This will broaden our offer to either be an independent product or integrate with our system for especially law enforcement and security users, but also in certain military applications.
We have signed a global sales and distribution agreement with the company, N-ear, and we really look forward to advancing this relationship and see the outcome of our efforts over the coming years. Page 11, on a final note, business as usual. We are developing according to our strategy, and we will continue to invest in our product and organizational development. We do what we think is right long term for the company in terms of our organization, in terms of our investments. Again, even though there is a global pandemic right now, we are, as all others I guess, very sure that this will disappear and the need for advanced hearing protection and communication is there and will not go away. We have a very bright future ahead of us with what we have in our portfolio.
With that concludes the presentation, and we are now ready for questions, please.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Again, as a reminder, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. Once again, star one should you wish to ask a question. Our first question is from the line at Yi Wei Shi from SEB. Thank you. Please ask your question.
Hi. Good morning, Lars. Congrats to the strong order book. A couple question from my side. Firstly, actually on this over-the-ear headset T7, is it possible for you to give us an indication of the average selling price and also gross margin?
For competitive reasons, I will not give you the selling price, but I will say that the gross margin is within the INVISIO predictions of 60%-65%. This is a product that is developed for being competitive in the market, but also something that we of course can make money from and that can help us continue to develop more world-leading products. We have a healthy gross margin on that.
Just follow up on this. Is it fair to assume you were priced very competitive compared to, for example, the product from 3M, the ComTac version?
I think that again, this headset will exist in different variants as well, and this headset is unique in the way that it connects to our system. Of course we will sell it individually, but most of the time our customers will interface it to the existing INVISIO system they already have. Therefore, in most cases, we will not be in direct competition with someone because it is part of our system. What I did not mention is that it has an absolute leading level of hearing protections. For those that requires the absolute highest level of hearing protection without going to an in-ear solution, we are the one. We do have the highest level of hearing protection.
All right. Fair enough. Is it possible to give an estimate of the market potential?
It's big. I would say that it is big because both the in-ear and the over-the-ear markets are very substantial. As I said, sometimes it's a matter of choosing between the two, but in many cases it is a possibility for users to have both. Especially also when we go into law enforcement, there has been a tradition of choosing over-ear headsets instead of in-ear, even though in-ear has advantages in terms of size and weight and so on. Again, now at least the customer has a choice, or he or she can choose both. It's definitely going to be an important area of revenue for us.
Okay. Thank you. My next question is regarding the small unannounced orders. It has kept increasing quarter-over-quarter. Is it fair to assume this will be the run rate going forward?
I don't want to give you any indications on that, because again, we can only influence the order intake so much, and especially now, where it's difficult to get out and so on, it is difficult to predict. I think that what we can say, based on the fact that we have many more customers and more geographies and more products and so on, it is fair to say that the number of small orders is in an increasing trend. From quarter to quarter, there will still be fluctuations. That will not change. In general, over a longer scale, I would say yes, there are more smaller orders because we have many more customers. We have law enforcement, we have intercom, we have the different geographies. Yes, in general, there will be more smaller orders.
Great. Do you have a knowledge on how much of those sales, the small orders, have been the replacement sales?
Unfortunately, that's the tough part because the customers will never tell us exactly how much is replacement and how much is for new users. Again, our best guess based on a few customers that we have relationships to is that maybe 15%-20% is replacement.
Okay, thank you. Last question. The financial items, it's quite high in the quarter, and you mentioned this is the hedging loss?
No, that is related to stock and currency fluctuations because of the fact that we have quite a lot of products. We moved quite a lot of products to the U.S. to our warehouse to be able to avoid the pandemic and be able to ship to customers quickly. When the U.S. dollar has been going not so favorable against the Swedish krona, then we have a technical decrease in the value of the stock. It's paper money, but that's where it comes from.
Okay. Thank you. I'll jump back to the queue.
Thank you. The next question is from the line of Viktor Westman from Redeye. Thank you. Please ask your question.
Thank you, and congrats on a solid report. I was wondering, since you're going to sell a lot of third-party things also in the future, have you considered reporting in-house sales versus third-party sales?
No, because it's still part of a system, and also it is not a significant amount. It is still something that all in all, we would like to sell our own products first, but we are also happy helping a customer if the customer has a certain preference or has a legacy product. We are not going to make it such a strong part of our strategy so that it needs special reporting. It is a part of the total portfolio, and it's never sold individually. It's always sold as part of our system.
Okay. One question also about the pricing when you launch new products. How does the bargaining power look like when you have some pretty large customers there? Are you able to raise the price points when you come with new innovations?
It depends a little bit on what type of product it is and what type of market it is. I think all products that we put into the market are evaluated. We look at competitive products. We look at price points in general, but we also look, of course, at obtaining a decent gross margin. More importantly, we need to make sure that the customer is willing to pay what we put into the market.
I think we are after 15 years now, we do have a lot of experience, and we do know what the right price points are. As I said, we also think that INVISIO should be able to operate somewhere between 60% and 65% on average. It will vary a lot depending on third-party products, but also depending on the sales model, as we have discussed before.
Our direct sales is the dominating part of our business today. In the past, we used to sell through resellers, but now we sell mostly direct. When we go into law enforcement and security, there are a higher amount of resellers that we need to sell through to get the outreach, and that will also impact the gross margin a little bit. Still, I think all in all, then we have the intercom, which can increase our gross margin somewhat. All in all, summa summarum, we should be able to get to 60%, 65%.
Right. On the T7, can you discuss if this adoption will be faster than, for instance, the intercom?
Yes, it will. Yes.
Okay.
Right away. Many customers. Again, due to the pandemic, you can say that we have not had a possibility to introduce the T7 at an official trade show. We decided to do it now. The product has been known to many of our customers for quite a period. That's also why we already in the quarter received the first orders because they have seen it for a while, and some customers have been testing it for a while.
Maybe I can end with a Corona question then. Is it possible to estimate how many tenders would have been finalized if there had not been any coronavirus?
No. That is not possible. I wouldn't even try to do that. That is very difficult to say.
Okay.
Yeah.
Right. I was just thinking if the initial timetables had not been moved and et cetera. I understand.
No, I think it's more like in certain countries where we think they could be getting towards doing a tender, then those activities have simply been put on hold because of the pandemic. It's not happening right now. That's what we see.
Okay. Thank you so much.
Yeah. Welcome.
Looks like there are no further questions. Please continue.
Thank you, everyone, for calling in. Talk to you next time after the all-year report in February. Have a great day.