Good morning. Welcome to MSAB's Q1 report. Just want to check that the sound is working for you. If you could just give us a thumbs up in the chat, that would be great. Perfect. Thank you very much. Okay, I am just soon going to hand over to our CEO. Let me just—there we go. Without further ado, I am going to hand over to our CEO, Peter Gille.
Good morning, everybody. Let's jump into the report then. It's been an okay start of the year. We have had a lot of positive customer response to the changes we are doing in our products, and we can see the effect coming now. Net sales was very close to last year, but then last year we had some significant big deals in India that we do not have this year. Overall, we're quite happy with the performance from the sales team. We still have a good margin since we are now focusing more on selling software than hardware, even though we have sold some hardware this quarter as well. We still have a good balance sheet that allows us to continue to invest in our products.
If you look on the regional parts, we continue to grow in APAC, and I think we will have good opportunities to continue to do that through the year. The number looks a little bit strange since we had the big India order last year, but we are really growing in several parts of APAC. We also see that the growth of XRY Pro continues in EMEA. Customers go from XRY, logical and physical, to XRY Pro. I think it's the best product in the market right now, and I think our customers agree with us. It is a continued growth of the XRY Pro sales, especially in EMEA, but also in the other regions. We thought we would have a really, really good Q1 in the U.S., but the administration has been, as most of you know, affected by Trump, the Trump administration.
There is a lot of confusion in the administration, and there is also a lot of cost cutting in the administration right now, and that has meant project delays to us. We still believe that when things calm down, there will be significant opportunities in the U.S., within border control, where we are strong, and also within the police and the military sector. We see increased interest from our resellers and partners, and we have done a lot of activities, and we continue to do a lot of activities now in Q2 with both partners and resellers and being at events. That is a positive thing. Some of these events, for instance, in the U.S., are also affected by the cost cuts and the administration confusion, which means that the events in itself might have fewer people than it used to have.
Regarding the product then, as I mentioned, the XRY Pro is really—we really see the effect of it, and it's now our best-selling product. It's about 30% of the sales today, especially in the Android area then, where we see that we have the best product in the market. We have also launched our new kiosk, the Mk4 kiosk, and we got very good reception of that as well. Some customers have already invested in it, and we see several others that will upgrade or invest in the Mk4 kiosk, which is the leading frontline solution in the market. We have also released our UNIFY Collaborate, which is a product that has a big potential, and we see a lot of interest from customers. We have several pilot customers now testing out the product, and we get good feedback from those test pilot products.
There are customers in the Nordics, but also in APAC and in EMEA. Several customers are testing out the product. That is all from me. I will leave the word to Tony to go through the numbers then. Our CFO, Tony. Thanks.
Thank you, Peter. Looking at the finances, the first quarter revenue was marginally the highest ever for Q1 for the company, although we continue to experience some delays in our customers' business cycles. We ended up with an organic growth of 0.2%, while the growth, including currency effects, was 1.3%. The U.K., one of our largest markets in the global perspective, contributed to an increased revenue in the EMEA region. They stand at 54% of the 57% in EMEA. Lower sales in Q2 last year, compared with the historical sales cycles that the company has, has affected the rolling 12-month sales figure, which closed at SEK 406 million. In terms of our products, we continually see that the XRY Pro are contributing to increased new sales in all regions. Finally, I'll leave you some foreign currency numbers.
95% of our revenue is in foreign countries, of which approximately 35% are in U.S. dollars, 20% in euro, 20% in GBP, 10% in the Canadian dollar, and 5% in SEK. The gross margins are still at a high level, which has resulted in a positive trend in the rolling 12-month figures. When comparing the EBIT with the corresponding quarter previous year, one must take into account that the restructuring cost of SEK 19 million was reserved in Q1 last year. Continuous investments in excellence and products have resulted in a slightly higher cost base on a running basis compared with last year. There is also a plan to replace the consultants we have in the company today by new employees where it's possible. Talking about FX again, we give you the number here: 70% of our costs are in SEK.
Finally, the last slide for today and finances, looking at the balance sheet. The balance sheet remains strong, which enables a good foundation for continued investments. Cash flow-wise, we started the year with SEK 138 million, and that cash flow was affected during the quarter by cash-out effects of previous reserves for restructuring, as well as ongoing investments that have not yet been completed and therefore not balanced yet. Finally, we have some currency effects as well since the Swedish krona has strengthened, especially in March. Remaining cash-out due to one-off reserves is SEK 1 million. Working capital is under good control, and our KPI measure, which we follow internally, today's sales outstanding is still below internal targets.
Okay, let's continue and conclude the call before the questions. We have continued also to work with our strategy going forward, and we really want to strengthen our position as the preferred partner in digital forensics. We are focusing on that. We're not going to the analytical side or anything like that. We do that by really continuing to focus on investing in our products, in innovation solutions, and making the products best in the market. We are a product company, and the key to our success would be to provide good products to the market. We are continuing to invest, increasing the capacity within R&D, and delivering good products to the market. In essence, that means that we are building the best extraction product in the market with XRY Pro, which really can unlock most Android phones in the market.
We also continue to invest in our already leading frontline solution with the Mk4. We also have the new products, which is the UNIFY Collaborate, to really gather the information and the complementary solution to our portfolio then. In addition to that, we continue to also keep our customers very satisfied by having very good customer support, which all our customers think we are very, very good at. That is our strategy, continued strategy for going forward. In summary, we are satisfied with the result in the quarter. It is actually our best Q1 quarter ever, but very slightly our best months. We see that the investments that we are doing in our products are being received positively in the market. We see clear signs of that also now in the revenue numbers.
We see also a growing confidence in the XRY Pro, and we also hear that from our customers that we have the best tool right now in the market. This tends to vary over time depending on who is on top and who is not on top. Right now, MSAB and XRY Pro are on top. We also see that the new capabilities that we now are investing in iOS FFS will open more doors and will give our customers even more confidence to invest in us. We will also then continue to now focus more on also brand positioning and marketing in the market. We will have more focus on that, and we will invest more in marketing to really get the full attention from the customers to what we are delivering when it comes to our products.
With that, I want to thank you all for attending the call, and now we go to the question and answer session.
Okay, thank you, Peter. Thank you, Tony. Let's start off with some questions then. You signal confidence in the growth ahead. Is it mainly based on some projects having been delayed, which you expect to be delivered in coming quarters, or are you seeing better underlying demand ahead?
I would say that we see better underlying demand ahead, not based on that the demand is higher from the customers, more that our products seem to be more appreciated now in the market. As mentioned in the report, this is a process that takes time. Even if you have the best product, it means that the customer still is used to having another product, and it is a big thing with process and training and so forth to change a product. It takes time. Also, the customers today have a limitation in the budget, and they might have multi-year agreements and so forth. That means that it takes time until we see the full benefits that they are going over to XRY Pro instead of one of the competitive tools.
Regarding gross margin, do you still expect 92% gross margin for 2025 as communicated at the Q4 earnings call?
Yes, I can take that one. As Peter mentioned, we rolled out the Mk4 kiosk this year, and we already delivered a bunch of them, and we will still deliver a couple of hundreds of them. That drives more COGS. Still putting 92% as a target for the year.
In regard then to increased investments, what magnitude and timing are there around that? Is some part of that to be seen in OpEx or just in CapEx?
Do you want to take that? Shall I take that? I can start with that, and you can do complementary. We do not go out with how big the investments are, but they will be visible both in CapEx and OpEx.
Yeah, I agree.
Yeah.
When we balance them and put them full-fledged into the product, they will be balanced. That hasn't happened yet, but are expected to happen this year.
In essence, it means that we both invest in acquiring some capabilities on the market, but also that we invest in hiring more people to work with those capabilities. That means that you will both have a CapEx and an OpEx effect.
Okay, we have a couple of questions on staffing then. How much of Q1 OpEx was affected by temporary consultants to fill in for vacancies?
Consultants' cost is three times more this quarter than it was last year, quarter one.
In regard to hiring then, net, we hired 11 people in Q1 over Q4. What are the hiring plans for the rest of the year?
We have a plan to increase mainly on R&D, but we have fulfilled a big part of that hiring in Q1, which is also a very good sign that it's easy for us actually now to hire here in Sweden, which has been difficult before. We are fulfilling, I would say, two-thirds of that plan today. Some more hiring will be, but not as many as we had hired.
Okay, those were the questions that we had for the moment in the chat. If there are any other questions you'd like to pose, add them to the chat. Okay, I think that was the questions we had.
Okay, thank you all for listening. I hope you enjoyed it, and you can always contact me or Tony by the phone or email, of course. Thank you all.
Thank you.