Okay, good morning, everybody. My name is Peter Gille, and I'm the Acting CEO for MSAB. I've been that now for a month, but I have previous experience from being part of the board for almost four years. And, I also have a long background as a CEO, among that, nine years as a CEO for a similar IT security company as MSAB. Today, we will present the interim report, and we have an agenda where I will do a short introduction, and then our CFO, Tony, will go through financials. After that, I will do a more deeper update, and then we will sum up, and then there will be questions, a possibility to answer questions. If you have questions, it would be great if you could post them in the chat, and we will bring up them at the end then. Okay.
Let's get started. Looking at the quarter, it was not a good quarter when it comes to sales. We had net sales of SEK 79 million, which is a weak quarter overall, with some regional variations then. From a negative point of view, EMEA was the region where we didn't perform well. However, we consider this to be more of a timing issue. We have not lost big deals, but there are a number of projects that happened last year in this quarter that will not happen this year, but they will happen later. If we're looking at the full-year, we have a positive view. I will come back to the sales later in the presentation.
Our gross margin is significantly improved, and that is a thing we are working with very hard in the company to improve the margin and not sell so much hardware, instead focusing on software. This is also the main reason why the full effect of the decline in sales doesn't go through to the EBIT. So we have the improved gross margin that compensates partly for that, and then we also have a reversal of restructuring costs and better cost control in the company. So the EBIT lands at -SEK 3.5 million then, compared to +SEK 2.7 million last year. The cash position in the company remains strong, and we also have a small positive cash flow this quarter, even though we have the negative EBIT results. So that's a summary, and then I will leave the word to Tony to go through the financials.
Hello, I'm Tony Forsgren, the CFO of the company. Let's see at the financials for the quarter then. So as Peter mentioned, we have a net sales of SEK 79 million, compared with last year, it's a decline actually of 24%. If we exclude FX effects, we have some small improvements in the SEK versus other forexes, so we had a forex-adjusted decline of 25%. Gross margin, we're working hard with. We have had no major hardware sales during the quarter. Compared with last year, we had a big one in the Americas of SEK 70 million. That's why the gross margin improvement is significant during the quarter. We ended up at 95%. I think that's an all-time high gross margin within the company, compared with 84% in the isolated quarter last year then.
During the quarter, we also made a cost reservation of the former CEO of SEK 4.8 million that is located in the personnel cost, which ended up on SEK 54.7 million. Also worth mentioning is the one-off costs. We did a reservation in Q1 for restructuring of the development department. That one is finalized. We reserved SEK 15.2 million, but when finalizing and summarizing up the end of the results of that restructuring, we reversed and put back SEK 8 million. Why was there such a discrepancy between the reservation and the final cost then? There were people joining other positions within the company, and also there were some people leaving when they knew that they were at risk. So we reversed back SEK 8 million then. Average FTE in Q2 is 184, compared with 190 last year.
If we talk about EBIT, we ended EBIT at -3.5, but if we adjust it for an alternative EBIT with a one-off and the restructuring cost put back, we had an EBIT of -8.2. I will come back to the 9.2 number, which is in the parenthesis. The balance sheet. We keep on having a strong balance sheet and close the cash position at SEK 130 million, even though we had a dividend paid in May of SEK 18 million. Worth mentioning also is the restructuring cost and the one-off costs made in the books. We still have SEK 15 million in cash to put out from those reserves, even though the cost is fully booked. In summary then, APAC and Americas are somewhat below in the quarter, but looking at the accumulated half-year one, we have had a good sales development in these regions.
APAC is up 90% and America is up 45%. EMEA has had a weaker quarter compared with other regions, which partly is due to timing effects and the way we recognize revenue, where we take about 85% of the revenue day one of the deal, regardless of the length of the contract, and the rest is distributed over the contract length. So timing and the revenue recognition is affected a quarter isolated in Q2 then. Continued focus on OPEX per FTE, and we see a really positive development in these efforts. The one-off items have had a positive impact in the quarter, where we put back SEK 5 million. The corresponding quarter last year, we actually had one-off as well, as we had a resigning CEO, where we have a one-off cost of SEK 6.5 million.
Taking last year's EBIT and adding 6.5 is where you end up with 9.2 to compare with the -8.5. The company continues to have a strong underlying cash flow despite the negative result. We keep on continuing focus on working capital, which contributes to the positive cash flow. Dividend one was paid in May of SEK 18 million, and we expect to pay the dividend two in November of SEK 9 million. Peter.
Okay. Thanks, Tony. So going back to the sales for Q2 then, there were some of the projects, the big projects that we had last year in Q2 that we didn't have this year. The reason for that is partly that, as Tony mentioned, we had some contracts where we actually did a two-year contract. We have two of these, and they will not show up this year because they are a two-year contract. So they happened last year, and they will not happen this year, and they will be renewed the next year then. So no loss in customers, but also no big projects this year in Q2. Then we also had a big hardware contract last year's quarter, which we didn't have this year, which also wasn't really a big profit project, but it will not happen.
Then we have some delays in our projects, some postponed in the U.S. There are some we are waiting for some decisions. We are very positive towards the U.S., and we think we will see some significant development during next quarter in the U.S. We also have had bigger expectations for France, but we think that France will start to deliver now also in Q3 and Q4. So looking at the overall picture, we don't see that we are losing customers. We have a very healthy pipeline, so we are still positive if you look on the outlook for the full-year. As Tony mentioned, APAC is performing well, and the U.S. is also on track if you look on the year so far then, and looks even better.
In EMEA, sales are on track in Scandinavia and Eastern Europe and in the UK, but in France and Germany, we are not seeing the development we want to see, and we really want to keep focusing on them in the coming quarters. We see positive signs in France, and we will work with Germany to get them back on track as well. Also interesting to note this is that we have an increase in our premium product, XRY Pro, which is 4x as expensive as our normal XRY, where customers are really buying more of the XRY Pro product. We also see from the military and the border side an increased focus, where there is a big demand for the products we have, and we are also focusing on developing the products to fit better in the customs and the military sector.
So going forward, the next six months, we really need to focus on execution and revenue results. But as I said earlier on, we have a positive view on the sales for the full-year still. I've been here for a month, and I have some initial findings that I want to share with you. First of all, the forensics is a growing market, and I've confirmed my positive view on that, also for MSAB. We have a lot of good opportunities in a number of different sectors in this market. We have already started to work on our portfolio before I joined, and we have some really, really interesting developments coming up. So new products that will be coming out in the coming 6-24 months.
With that said, we are also doing a strategic review and looking at other industry segments and how we can adapt our products to also catch other revenue streams than we are addressing today. I have big hopes also for this going forward. My initial findings is that I see I have a very positive impression from the business and the product development. We still need to focus on the execution and getting the products out to the market and also on the sales side of things, but we have a lot of opportunities out in the market that we can catch. In summary, we are disappointed when it comes to sales in the second quarter of 2024, but we have a good pipeline for the rest of the year. We know there are some delays in projects, and we are optimistic for the full-year.
The balance sheet is solid, and our cash position is good. We will continue to do the review of the strategy, and we will continue and further invest in product development to be competitive and also to catch other revenue streams in the market. We will see a lot of good growth opportunities, but we need the right execution, of course, to execute on them. So that's it. Then it's room for questions.
Yes, we have one question already. Could you please dive a little bit deeper on the reasons for the weak EMEA markets? For example, nothing mentioned about the booming defense market. Are we losing existing customers or licenses in addition to slow new sales? Long question.
Yeah. So a little bit more details on the EMEA market. And first, I can also answer the question if we are losing any customers. That's really one of the things I have deep dived into, and there are no signs that we are losing any customers. So this is more about projects where we have signed multi-year agreements, projects that have been delayed, or projects that are in discussion but didn't get closed this quarter, basically. So we don't see any loss of customers. And the defense segment, the question was also how we are acting in the defense segment. We see big potential in the defense segment, and we also see big interest in the defense segment for our defense products.
So that's one of the areas that we are focusing on, and I hope we will see some positive development also in that sector going forward in the Q3 and Q4. And then coming back then to EMEA, specifically, it was in EMEA we had the big projects last year in this quarter. In France, we now have the Olympics, and we have a lot of things going on. And we have won some big contracts in France, frame agreements we haven't executed on yet. So we have big hopes that France will do a comeback in Q3, Q4. In Germany, we need to look closer to the market and see why we are not performing in Germany. That will be an action that I will take during this quarter. So all in all, I think, and the rest of EMEA is doing well.
I mean, the UK is doing well. Sweden and Eastern Europe are doing well. So I think these are the isolated markets that we need to rebound on. But we have, as I said, a healthy pipeline. We have a positive outlook for the rest of the year.
And then a question on the competitive situation. Has this changed? As we mentioned in the Annual Report, that cybersecurity companies and e-discovery companies could become competitors for us. Has the landscape changed in any way?
Now I've only been here a month in the CEO role, but I haven't heard anything about that it has changed. I still think that can be a potential threat in the future, but right now I think we have the same competitors as we had back in the time.
Okay. And then another question from Teo Persson regarding the global sales organization. Do you believe that this change impacted new sales in the quarter and initially decreased sales efficiency?
Yeah. So the question is, I think the question is the restructuring that we've done in sales, if that had impacted the sales in this quarter. So it's a kind of an effect from that reorganization and restructuring that we did previously on sales. And the short answer to that is no. We don't think that's what has impacted. This is a few big projects that came in in Q2, and they have different reasons, but none of them seems to be related to the sales organization or the sales restructuring. So no.
So far, we don't have any more questions.
No more questions.
Let's see. One more here. The Canadian order mentioned in the report, has that one been published before?
The Canadian order, it is a renewal order. So it is an existing customer that has renewed their contract with us, but it's one of the major projects that did come this quarter. So yes.
Any other questions?
Done, I think we will say thank you to all of you, and I hope we can have a good presentation next quarter, also when it comes to sales. Thank you.