My name is Amanda Åström, and I am Head of Investor Relations. Today, I have with me our CEO, Anders Hedebark, and our Acting CFO, Linus Marmstedt. We'll start off by handing over to Anders, who will give you some highlights for the quarter.
Good morning, and hello everyone. Today, we are reporting the second quarter, 2025, and we are reporting from a challenging content creator market. Our net sales decreased by 13%, down to SEK 171 million, and half of that was organic negative growth, and half of it was explained by currency effects, mainly a lower dollar or Swedish krona exchange rate. As I said, the market is tough, and we see that the customers are hesitating to take decisions to buy, big decisions to buy. This has also affected our EBIT, which is down to SEK 18 million and 11% EBIT over sales ratio. Of course, this is explained by the lower sales, but it's also explained by product mix and somewhat increased cost for launch of our new LED products, and I will cover that more later in the presentation. We launched, though, a lot of new products.
First of all, we launched the B20 and B30, which are two new flash products, and we also launched and renewed our line of LED products. More of that later. One of the other things that is, of course, affecting everything is the development regarding tariffs into the United States, and we're working heavily with that and following the situation closely. Sales declined by 13%, and that looks dramatic, but as I said, half of that is currency effects, and half of it is organic growth. If you look into regions, we first see the Americas, which is not showing a decline, but mainly in local currencies. The organic growth was slightly up, but given the currency effects, we are now down 9%. We're also seeing a decline both in organic and currency effects in Europe as well as in Asia Pacific.
The downside of organic growth is explained that we had very good product launches in this quarter this year, but we had actually even better product launches last year in the same quarter. Last year, we launched the Pro D3, and this year, we launched the B20 and the B30 products. I would like to explain also what we have done into the LED product market. We launched at the Cine Gear Expo in the beginning of June. We launched our full line of LED products, the LP2000C, which is a large panel used especially in cinema production, the L1600 Color and Daylight versions, which are used both in cinema but also in the content creator market. The initial reaction was very good, especially to our large panel, because we were at Cine Gear and the interest was huge for that kind of product.
We have not started to ship yet, so we're taking costs for launching the products, but we have not started to ship yet. We expect to get the production going so that we will start shipments towards the end of the year during Q4. We hope to see figures for that in the fourth quarter. In addition to the LED launches, we also launched the B20 and the B30, which is a replacement of the B10, and the reaction from the market was very good. Over the last 12 months, we have updated our flash product line. We have brand new, very great products selling into the photography market. We also have a very good lineup for professional products into the LED market, both to the cinema market as well as to the content creator market. This results in that we have the possibility to approach a greater addressable market.
We see that the addressable market is increasing with three, four times from SEK 3.5 billion- SEK 14 billion/SEK 15 billion. We see that the flash market is rather flat, and it is not increasing, and we can see that the content creator market, especially for still photography, is flat. However, we also have now products, especially for the film and cinema markets, which all our products are positioned towards that market, as well as to the dealers and large studios and content creator economy market. We see that large still photography studios are investing in not only flash, but also a lot into LED for shooting small, shorter films to be used in both e-commerce, but also for driving sales of different brands. That market is actually very attractive at the moment. Thank you very much. I will leave the word to you, Linus.
Okay, thank you, Anders. As Anders mentioned, we see no major changes in the underlying sentiment. The customers are still a little bit affected by the cautious market environment. This means that we actually see the decline in the top line of 13%, of which half is explained by currency effects and also the strong launch last year compared to this year in terms of the B- series this year. I think it looks really dramatic when you see the sharp drop of 50% in the EBIT. That is, of course, partly explained by the sales decline, but also the product mix. There is an accounting effect as we now start to not decrease, but we're not capitalizing as much as we had done in the past given the current R&D portfolio and where we are. I will revert to that a little bit later.
All in all, it is a disappointing result, but we are taking actions. We are seeing the first sign of our earlier communicated cost reduction program. We see not the full effect yet, but we start to see the signs of it. The next slide is not really my favorite slide. As you see, it's a declining trend. It is a tough market and it has been for quite a while. We are really acting hard to increase and improve the top line, but also, as I mentioned, the cost side of it. We are really motivated and have a clear target to really reverse this negative trend. We communicated that we launched a cost reduction program earlier this year, and now we're starting to see the effects. During the quarter, we haven't really seen it on the personnel expenses yet.
That is about to come during the second half of the year. As you can see, we have run a very tight cost shift during the quarter, and especially on the other external expenses. During the quarter compared to last year, we actually saw a decline of 15%. We are on track to reduce the total cost base by 20%, and we will see the full effect in the first quarter of this year. That's positive and that we really have full control of our cost. This is also despite the fact, as Anders mentioned, that we actually had some cost related to the major launches during the quarter. Despite that, we continue to invest in new launches, we see the total cost base actually decline. This is the R&D portfolio in terms of the ratio compared to sales.
I think we have stated it for a couple of quarters that now we have a really solid product portfolio. We can reduce the R&D spend both in absolute terms and in relation to sales. We are on target to reach the 10% of sales. You will see the full effect during the first quarter, as this is mainly driven by a reduction in personnel, which takes a few quarters to have a full impact. Of course, we hope to see the signs of improved sales during the second half of the fall. That hopefully will help us to reach the target. We are in full control of our cost base. We will achieve it anyway. That's basically it from my end. Over to you, Anders.
Thank you, Linus. Let me summarize. Yes, we are in a tough content creator market. It is challenging at the moment, and this has an effect on the Q2 sales and the sales development. However, we have a great product lineup in flash. We have a great product lineup coming into LED, and we have, as Linus said, reduced our cost base. We are ready for better times ahead. However, this will have an effect towards the end of the year. It will take a while before this happens. We are also affected by the uncertainty of the tariffs. We are following that closely and adapting accordingly to the new market or the tariff situation. We are hoping for better times ahead. Thank you very much. Over to you, Amanda, for taking questions.
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 Jakob Söderblom from Carnegie Investment Bank. Please go ahead.
Yes, hello and good morning. I see that you have a question. I just wanted to ask if you could expand a bit more on the product mix development that's going on in the second quarter. Is there anything else here beyond the product mix?
Jakob, it's very hard to hear what you're saying. Could you please repeat?
Perhaps you can hear me a bit better now. Is this better?
Thank you.
Okay, perfect. Sorry for that. Now I'm just wondering a bit about the gross margin development and the product mix you're talking about. Could you expand just a bit? What are the different, what is the mix effects here that we're looking at? What does this entail then for the later part of the year as well?
Linus, would you like to cover that?
Yeah, I mean, on a general group level, we continue to have this gross margin target that we have, but we see, of course, some differences in various segments or product categories. We actually saw somewhat weak development in our studio business, which has fairly good margins. When the product mix is shifting, we see actually a smaller effect on that from a product mix perspective. It's not the major changes, but there are, if you have a very strong development in one segment with higher margin than at the group level, and strong margins in some categories that are on a group level target, you see the mathematical effect on that.
Okay, that's fine. Let's talk then on the studio business. You expect the current sentiment we get to persist throughout the year then, I'm guessing, given the comments in this call.
Yes, there are also some tariff elements in the second quarter, which actually has affected the COGs. We don't really see the current level as our long-term target. I mean, we still are working on the targets that we have.
Perfect. Thank you for that answer. Another question on cash flow. I see that the receivables are up quite a bit, and I mean, you're in a launching period here where you have somewhat of a mismatch, I'm guessing, in revenue and cost for these launches. Is it purely timing that this is going to swing back in subsequent quarters, or is it anything else?
It's more of a, I mean, as we have a number of important product launches, of course, the inventory and accounts receivable will increase temporarily, but it's no major change. It's more a timing effect.
Perfect. Thank you. Here's the final one from my end then. I'm guessing if you could talk somewhat of a bit, I mean, you present the Q1 numbers, kind of a similar commentary in my view, representing here during the call. Is it possible to give any type of information on this, how this has developed and guessing coming from April with the tariff announcements and so on, and now moving into the beginning of Q3? Do you see any type of, what do you call it, more underlying comments that you're hearing from your distributors and so on, in terms of market sentiment and changes? Whereas it's been a rather flat development, if you can call it like that, month over month in Q2 and now going into July.
No, I can take that. It is rather flat. We see no major overall from distributors and dealers and customers that it's changing up. People are still very hesitant, and also not only ourselves, our distributors and dealers are also following, especially in the U.S., what is happening in the changing market and tariffs, and that is putting a wet blanket over decisions. It is not changing. It is the same level of uncertainty or slow demand in our market, which we call the content creator market. It is generally the same feeling as we had in the beginning of the year. We see no shift, neither up nor down.
Okay, thank you for taking my questions. I wish you a happy summer.
Same. Thank you.
The next question comes from Marcella Klang from Handelsbanken. Please go ahead.
Thank you and good morning. A couple of questions from my side as well. During this quarter, you made quite a hefty reduction in your workforce. You mentioned 15%. Still, you did not report any extraordinary costs, no adjustments to your earnings. Have you been able to, and also you mentioned the cost for trade fairs, marketing events, while you have launched five products in the past 12 months compared to usually two, three. There is a lot happening in the company, and still, you're not reporting any kind of extraordinary cost. Is it by choice that you don't view this as extraordinary, or what was your reasoning behind this to take everything through the clearance like that?
Yeah, if I start commenting, I mean, on the event side, we see it more as an ordinary course of business. We don't want to have any one-off effects and to make a number of adjustments related to that because, I mean, we are a little bit conservative there. In terms of the severance payments and one-off cost relation to reductions, we have a policy that people are working to the final end, so to say. You're actually not allowed to take any one-offs there. They work throughout the notice period.
Do you need to pay any kind of extraordinary severance packages, or are you able to terminate the contract without extra costs for the company?
On an overall general comment, it's very low amounts. We don't see that senior reasons actually have it as a one-off cost. It's a part of the daily operation. Yes.
Understood. You mentioned around SEK 13 million effect on EBIT once these cost cuts are fully visible by the end of the quarter, which is around SEK 8 million per quarter if you just divide it by four. Is that enough to bring you up to your margin target, EBIT margin 25% up to 30%, or will you need to do more in terms of cost savings?
The short answer is actually that we are running the cost reduction according to plan, and we are, based on that, able to reach the targets.
You mentioned the Pro D3 that gave a very strong second quarter last year. Obviously, third quarter last year was weaker. Do you expect any kind of effect that we should take into account, tough comparables also in the third quarter, or third quarter last year is more without any extraordinary effects boosted by launches at that time?
Will you take that one, Anders?
No, but the third, I didn't really understand the question, but the third quarter is by the seasonalities is normally a weaker quarter since we have the vacation period in many countries in August and also July. This is the summer period, and it is normally much slower as we saw last year.
To answer your question, Marcella, no, we did not have anything extraordinary last year in the third quarter.
Maybe a follow-up question. The latest launches, B20 and B30, what do you mean by very good initial reaction? Is it sales? Is it pre-orders? Is it reviews?
No, it is sales that we have sold more into both into dealers and the sell-through dealers to end customers. It is in some countries, it is as expected, and in other countries, it is better than expected. It was a good launch.
Do you expect aspects from that also in the coming quarter or two?
No, so I can't say. We're talking about the second quarter now and the third quarter. We will know when we summarize at the end of September, beginning October, where we added. Normally, as you know, as we communicated earlier, we have a good selling into the market and that affects the figures. It helped the figures in the second quarter. It would have looked, we would have sold less if we hadn't launched. The launch was good, but the market is a wet blanket over the market, over the content creative market. That's why we're not seeing figures overall increasing. We have this tough comparison in last year.
Maybe a question that I, and I guess I asked this before. When you have a successful product launch, do you usually have an effect in that quarter? Like half of the sales are done that quarter or less than half? How long is the wave of increased sales from a particular product usually?
No, but it's around the launch date. It's prior and around the launch date. It is not several quarters. It is during that quarter normally. In this case, we launched these products in the first half of June. We saw the selling effect in May and in June for those. What we do is that we obviously sell into the dealers so they fill their stock, and then we also monitor their sale through. In this case, for the B20 and B30, we saw replenishment orders coming quite fast, actually, and we were very happy for that. It is around the month time, around the launch.
A question regarding the important LED push that you are doing and the hesitant consumers. Do you believe that your expected customers, that they are postponing purchases, or in these challenging times, is it possible that they are downgrading to cheaper competitors' products such as Aputure, ARRI, and so on?
First of all, downgrading to cheaper products, that is always happening, of course. People are shopping and trying to take smart decisions, so you should never neglect that. Of course, this is happening by professional purchases. We also see the trend, as I presented in my last slide, that the flash market is not increasing. We see that large studios are investing in LED also. That is, of course, one of the reasons why we are entering this market, the LED product market. We expect, and we already see, we already have orders, pre-orders for our product launches. We are very happy. We think that we will be able to take a small premium position in that market and build from that position going forward. The addressable market is also, bear in mind, much larger than our current addressable market.
There is more room to maneuver, and there are more segments, both in price and products, in that market. That is an answer to your question, Marcella.
Thank you so much. These were all questions for me. I also wish you a very good summer. Thank you.
Thank you, the same.
As a reminder, if you wish to ask a question, please dial Pound key, five on your telephone keypad. There are no more phone questions at this time. Now is time for the written questions.
I have not received any written questions here today. I just wanted to thank you all for joining us today and also give a gentle reminder about our third quarter report, which is published on the 23rd of October. Thank you.
Thank you.
Thank you.