Thank you for coming to this meeting today for us presenting our Q3 and nine-month results. Please interrupt me at any point in time to answer any question that arises. We will start with corporate events, key corporate events. We just completed our due diligence for the acquisition of Matrix Media, and we are very close to signing a deal and executing this transaction. At the same time, ASBIS finished its distribution center in Kazakhstan, a total of 25,000 sq m, giving a lot of capacity and ability for the group to continue its growth.
And lastly, yesterday we had a board meeting deciding on an interim dividend of $20 a share, about $11.1 million payment based on 2025 results, a continuation of this dividend policy of the company. More information on the warehouse in Kazakhstan, as I said earlier, 2.6, almost 2.7 total, sorry, 25,000 square meters total, warehousing about 18,000, taking the ability of and the capacity of the group to 70,000 square meters.
As I said, opening doors for further growth that we expect in the future. Having said that, the balance sheet on the assets side, property, plant and equipment, and the cash flow on investing activities, which start slowing down on this capital expenditure after the completion of this Kazakhstan facility. That's the dividends outlook from 2017 to today. More than $130 million have been paid to our investors, investors who trusted the company and stayed with the company for so many years. We aim to continue paying this up to 50% of our profitability for the years to come, both in terms of interim and in terms of a final dividend.
As I said already, the interim dividend was declared based on 2025 results. I repeat, $20 a share, like last year. Quickly on the financial results, starting with Q3, a significant, almost 29% top-line growth on the back of improved Apple business, but also this AI evolution is taking us to much higher than others in terms of sales. Yes, with a little bit lower profitability in most of the cases, but we managed to gain an improved gross profit margin for Q3, above 7%, 7.03%. And we aim to continue that, given also the seasonality of Q4, business of which is already looking good.
But staying with Q3 2025, a couple of other observations, and we also see some slides to follow to explain that we experience lower financing cost as the spread we pay to the financiers is becoming lower, given the strength of the group. We continue to strengthen our equity. Therefore, we manage better spreads from the banks, but also given the lower base rates, not only the euro that is already below 2%, but also SOFR and the other successors of the U.S. LIBOR are already looking lower than 4% with a tendency to further decrease. So not only this year we see saving, but going forward, especially next year, we expect further saving coming from financial expenses.
Yes, we need to pay more financial expenses as we grow bigger. You see the growth we are running already 29% for Q3, but also 26% for the nine months. Therefore, that will take more financing utilization, financing lines utilization. Therefore, more financing cost, but the weighted average cost of debt we already reported for the nine months, 8.1%. Remember, last year for the whole year, we had a 9.9% weighted average cost of debt. That's an improvement adding positively to the results of the ASBIS Group. As a result, Q3, we ended up with an $11.6 million net profit after tax, registering a 23% increase on a year-on-year basis.
The net profit margin is 125. For the nine months, starting from the bottom, we talked about the top line 26%. We managed to increase the profits by 5%. $31.1 million is the number. And as I said, we expect due to seasonality, due to some shortage we saw in the market, due to some good reception we saw for iPhone 17. The new product introduction NPI only started end of September, but we see positive trends that we expect to add value, add profitability to the group for the remainder of this year. As SG&A, I think my last comment for the slide started to behave especially as a percentage to revenues.
We grow revenues, of course, but in the slides to follow, you will see that on a year-on-year basis, we managed to decrease the number of staff, though we have significant investments due to new markets and due to this AI evolution that needed investments, investments in human capital, not of capital nature, but a lot of questions related to why SG&As are growing. Because when the AI evolution started, and for us, started from Q2 this year, we are ready product-wise, human investments-wise to enable this growth and fly with this AI evolution.
Our top 10 countries, Kazakhstan keeps its number one position, significant growth. It seems that this government effort with IMEI regulation started to work. At least to some extent, I cannot say that they kept illicit trading into the country, but it started to help. Also, the dollar, the euro dollar and the other currencies against the dollar, with the dollar being cheaper, this differential that illicit traders had not only in Kazakhstan, but in Central Asia overall, started to slow down because they cannot find cheaper because of different currencies, pricing of the iPhone and the other Apple products.
Therefore, this is curbing illicit trading into the country. That's why Kazakhstan is growing nicely. When it comes to Central Eastern Europe, we see countries like Poland and Slovakia doing quite well on a year-on-year basis, leading the CE region, as we will see later. Ukraine, with the ongoing war, I think we are doing an excellent job. Our colleagues there are trying their best to grow within these difficult market conditions, crossing fingers that this war sooner than later will end.
A new phenomenon of this AI is that different countries, not traditional big markets of ASBIS like Taiwan, are picking up because we are serving with these data servers, data centers, server and server blocks and server components. We are serving countries everywhere in the globe. You see, Taiwan is already in top 10. We are serving America. We are serving Netherlands. We are serving Germany, all the countries. It's everywhere. Sometimes the same customer may have hubs and building data centers everywhere, not just Netherlands or Germany, but also U.S., also Far East.
So this is a new trend, a new phenomenon that appears in our numbers. Below, we see key countries showing the highest sales growth on a year-on-year basis. I wanted to add that this AI evolution, as we see a lot of our suppliers keep investing in this direction, seems to be a trend that is aimed to continue, not for next quarter or for Q4 or just for 2026, but it's a phenomenon that is set to continue, at least for the next two to three years. It's not something that happens, say, in three quarters of 2025, and then we don't expect. We see this continuing even in Q4, and we do expect this to continue going forward. Overall revenues by regions.
CIS with countries, especially Kazakhstan, but also Uzbekistan and other countries are growing very nicely. Ukraine is growing very well, as we saw before. Central Eastern Europe is mainly driven by countries like Poland and especially Slovakia, a significant 25% year-on-year growth. Middle East and Africa continues to grow, but at the same time, we see other regions like Western Europe. As I said earlier, we are serving everywhere with AI-driven data centers. We are serving all the components and all the building blocks and servers we have. As we will see later, we have a full portfolio of these products.
So we are ready for this evolution to develop for our company as well. Others, including Taiwan, as we saw before, is growing very nicely, creating significant numbers, 67 million just for Q3. And we expect this to continue. Product lines, smartphones still remains number one for us, mainly Apple, but more and more we are moving into others like Samsung. As I said, we had a very good product introduction for Q3. It was received quite well by the markets. And as it was end of September, the NPI, as usually the case, we expect that Q4 we'll be benefited, will be positively impacted by this reception of '17.
When it comes to this AI evolution, servers and server blocks, you saw 186% growth on a year-on-year basis. Later on, we will see the vendors making up for these components, for these server blocks. CPUs also significant growth year-on-year. And this requires a lot of networking products as well. We are there with almost all the suppliers, the big suppliers of networking products, 55% year-on-year. So overall, as we touched earlier, 29%, very significant growth on a year-on-year basis. An analysis of that, for the nine months, year-on-year, we did more than EUR 340 million extra on those product categories.
Data centers require mainly SSDs, less of HDDs, 240% growth, almost EUR 92 million on SSDs. We have all the big suppliers of SSDs in our portfolio. HDDs less, as I said, servers require more SSDs rather than HDDs, 20%-21%. Server CPUs, we are in the CPU business for quite a while, but now the server CPU business is growing very nicely for us, 730%, EUR 41 million extra for the nine months. Server memory, server DRAMs recording more than EUR 190 million extra for the nine months on a year-on-year basis. The portfolio of suppliers we've been working intensively on and investing significantly on the last years, I have to admit.
We are partners of NVIDIA. AI revolution is mainly, as you know, driven by NVIDIA technology. They keep investing billions and trillions into these technologies. We have all the other suppliers for servers like Supermicro, but also for all these components and building blocks. Western Digital mainly on SSDs, Intel on CPUs and GPUs, similar to AMD, etc. Significant growth on suppliers like Micron, very insignificant portion to our product portfolio in the previous years, but this year we see explosion of this business due to this AI evolution. Another comment here is that we see significant shortages end of Q3, basically on memories globally.
But starting from Q4, we also see storage constraints, supply constraints, shortages that are expected to positively impact our results. We expect further improvement of the gross profit margin because of this. Maybe a little bit lower sales, but higher the gross profit margin. Overall, I think a positive impact on the group results. As SG&As, as we talked earlier, if you see end of Q3 this year, compare it to end of Q3 last year, we have more than 85 people less on a year-on-year. We are watching carefully the SG&A, though we need to keep investing both geographically, but also product-wise to benefit from this AI evolution.
This is something I repeat we kept doing for the last few years. SG&A as a percentage to revenues, I think we are doing quite well, especially as revenues grow. But we are careful on SG&A. A negative impact that is showing a bit increased SG&A, of course, is the cheaper dollar. We are dollar reporting, so translating currencies into dollar gives us a higher dollar expense when in local currencies we pay more or less the same. The geographic expansion that is adding to SG&A is the expansion to the United States. We are about to open three stores, Bang & Olufsen stores, one in early December. We opened one in Italy, again, Bang & Olufsen.
We are also aiming to expand in Africa, further into Africa, especially the West, Ghana, and Côte d'Ivoire, and also increase our business in the north, especially Tunisia. When it comes to net working capital, we are running a significant increase in the top line. Therefore, we require more net working capital. Therefore, the cash from operating activities showed a negative impact. The investing activities because of the building in Kazakhstan continue to be at the same levels as last year for the nine months, but we expect this to slow down as the building in Kazakhstan is now completed, up and running.
We still expect operating activities as we targeted the last so many years to be positive for the whole 2025, obviously with a much improved cash position at year-end. It's not so easy to achieve, but as Q4 is improving a lot of things, margins not only for the distributor, but also for customers, the tendency there is to pay early and get product, scarce product early. Therefore, we expect that trend to reverse. The debt of the company. We believe we are at very good leverage levels, including the factoring utilization. We have about $170 million debt as at the end of September 2025, translating into ratios over equities about 0.5, 50% of our equities, our leverage end of September.
Consider this a very healthy one. I repeat, the company having strengthened its equity base, we have a better say on the spread we pay to financial institutions. Therefore, we have lowered the cost there. And also the base rates decreasing both in the Eurozone, but also in the U.S., is giving an additional positive impact on our results and especially on our net financing costs. On the 2026 outlook, the remainder of this year and 2026, product-wise, we expect this Apple NPI to further boost sales and profitability. As I said, we have a good reception by the markets. They liked the '17 that came out to the market end of September.
We continue putting emphasis on own brands as they come with a better margin. We continue developing the Breezy and the AROS. Breezy is already writing good numbers for us. On the markets, we continue to focus on CIS because of the Apple exclusive distribution and not only, and also with AI projects in almost all the countries, especially Kazakhstan. We continue developing with this AI evolution, Western Europe and other regions, not traditionally big for us piece. As I described earlier, we aim to expand geographically into Africa, especially West. I repeat, Ghana and Côte d'Ivoire, and also Tunisia in the next year.
On the customer side, we continue to address the retail customers with retail products, but we also aim to continue our business and strengthen our business with business customers. Of course, the premium retail stores I described, the Milan, I described the three in California, as a way forward. Financially, we continue to optimize our SG&As as we grow bigger. We continue to strive to achieve an improved gross profit margin. Q3, you saw 7.03%. So we want to keep this or better level going forward. We have decreasing financial costs, as I described details of earlier.
We continue our dividend policy of paying about 50% of our profitability to our shareholders, both in terms of interim like we're doing now and in terms of a final dividend sometime May, June. Risks and opportunities. We are in the middle of geopolitical instability. Ukraine war with Russia continues. In the Gulf, we have a lot of issues that not only regionally, but also globally are affecting business. We have illegal traders still coming into our markets with less weapons lately due to the dollar depreciation to euro and different currencies. We have shortages, supply chain disruptions. I mentioned memory in Q3 and also storage starting from Q4, both memory and storage in Q4.
We have volatile FX environment, but we are managing very well the last few years. We still have overall high rates because we borrow in countries like Kazakhstan, Ukraine. That is expensive to borrow, but that's the cost of doing business. At the same time, certain of those risks turn into opportunities for us for 2026, as we see hopefully a resolution to the Ukraine war with Russia and the Gulf ceasefire. We continue to sign server and server component agreements to strengthen further our portfolio. We are out there looking for good M&A possibilities for the group, giving us a say with products we don't have and we need to have in certain markets.
So overall, we see a bright future for the remainder of this year and 2026, given this AI evolution continuation, given the Apple's ability to come with new products that are well received by markets, and given overall our efforts to serve customers with a richer product portfolio and an improved-for-us product mix that gives us a better gross profit margin. I think that in a nutshell are the key messages of the company for today's Q3 and nine-month results. Most welcome any questions you may have either during this meeting or outside when we're going to have lunch.
I have a question on selling expenses. SG&A, of course, increased, as you mentioned. But if we look closer, actually administrative expenses decreased slightly. So all the growth quarter to quarter is based on selling expenses. And here, of course, you can say currency, dollar is weakening. That's a good point, but this would affect also administrative expenses. And we only see the growth on the selling part. So the question is, what affected here? Where is the impact coming from? If it's maybe extra bonuses for the AI projects.
Of course. Or, but higher bonuses in prior quarter when the AI sales were on a similar level. Or whether it's maybe the impact of the new headcounts related to U.S.A. and so on. If you could measure more or less how much out of these two bits, because it's $2 million, how much of it can be attributed to which factor?
The first answer to your question is the increase in GP, not necessarily sales. We pay people on GP. Therefore, you take a percentage over increased GP.
But GP is on a similar level as Q second quarter, slightly higher.
S o you're comparing Q3 to Q2?
Yes, exactly.
Okay. So that's one. You have to see the GP and say what happened to the GP. Therefore, I repeat, any 20% plus minus will give us extra selling, not admin expenses. The geographic expansion, and this is written on the interim report, geographic expansion into countries like Italy, Milan. We are preparing three stores, monobrand stores in California. They still didn't sell, but we have a lot of people working for us. Expansion into Africa, when we say we are expanding into new countries, I mentioned three countries already, Tunisia, Côte d'Ivoire, and Ghana, takes costs, takes number of staff.
These you have to pay before you see even a penny of sales or gross profit. Earlier, we talked about the AI evolution. AI evolution for us started beginning of Q2 this year, but we had the portfolio in place. We had the people in place. It's not just the evolution happens and then the next day you start selling. Have you managed to hire the right human resources to bring the necessary product portfolio in place? Therefore, when the evolution starts, you're ready to sell. These things we kept selling.
We kept saying to you guys that it takes investment before you start grabbing the benefits, and these are partly explaining what you're about to, what you're asking. We have increased to a certain extent SG&A, but at the same time, we see for the nine months 26% growth on sales, and that took a lot of investments before we got there. And the dollar, I don't want to repeat the fact that the dollar is getting cheaper, call it euro to dollar 116, is driving expenses up. About 50% of our costs are outside dollar.
So translating this non-dollar to dollar, because we are a US dollar reporting entity, obviously grows, inflates our dollar expenses. Somebody would say that it also inflates your sales to some extent. Yes, and your GP to some, yes, but now we are isolating SG&A, especially selling.
Why then administrative expenses did not increase at all quarter on quarter, second quarter to third quarter? They're on the same level and dollar should affect them just as well as the selling expenses.
You're paying different departments on admin costs. On selling, people are paid on GP, I said earlier. Us, the managers of the group, are not paid on GP. We are paid usually on NP. But again, different departments, logistics, finance, admin. It's different, you cannot be comparing really the two, unless you have one-offs and we don't have one-offs.
Okay. My point was only that the dollar situation affects both of the lines, yes? So it cannot be explained by.
Not only by the dollar. Yeah. Not only by the dollar.
But the investments, how would you measure the investments in the third quarter compared to prior one? One million, maybe? Or.
No, it's more.
It's more?
Especially the U.S. by itself is exceeding this level. So yes.
So the increasing in the U.S. is over $1 million?
We have significant expenses in the U.S., yes.
It would be great if you could comment on these. I would say rather slow development of smartphone sales. The increase year-on-year is only 2%. And Apple reported the new launch of the iPhone 17 is pretty good. It's going great. And Apple reports like higher percentages than 2% year-on-year. So the question is, why is it so? Is it because of the delay and we'll see better results in fourth quarter in terms of sales of iPhones? Or maybe it's not doing that great on the markets of ASBIS?
The NPI started end of September. So it's too early to write numbers on the 17th. We have to be patient for Q4. That's one. The second one has to do with illicit trading. Illicit trading is getting a little bit better. That's why I see the numbers are somewhat improving. Before, they were not improving, actually. They were on the downside when it comes to Central Asia countries because of illicit trading. Now, because of the dollar getting cheaper to these currencies, they lost the upper hand on buying cheaper from nearby countries like Japan, China, and India. So that's why it's kept to a certain extent, including the regulation in the country I said earlier.
Yeah, but that's exactly my point. If we look at there exactly, last year we had the illicit trade issue for third quarter 2024. And this year we had a great launch, better than last year, iPhone 17. Still year-on-year, despite taking care of the illicit trade to some degree, it's only 3% increase. It looks small in my opinion.
How much would you expect?
I don't know. Apple reports, I don't know, 11, 12, 14, something like this.
We expect something similar in Q4.
Okay, so it's just a delay mostly.
It's not a delay. It's end of September, the first, because it's waves. We are at first wave in a lot of countries, including Kazakhstan, South Africa, big countries. But it was only end of September. By the time they ship product, by the way, they have scarce product. They don't have enough product. But we expect these numbers to similar levels you mentioned to happen in Q4.
Okay, thank you.
I have a question about the gross margin on sales in the topic of servers. Did you see any improvement in third quarter versus second quarter?
Somewhat better, yes.
And what level is around this margin?
It's a little bit better. I cannot quantify, but it's a little bit so by supplier we see that we see better margin depending on the deal. I mean, we had the big Kazakhstan deal, for example, that gave us a margin about 20%. It's not all the deals with 3% or 4%. It depends if there is intermediary to the deal. It depends on a lot of things.
If there is a lot of suppliers bidding for this deal and they lower prices and they ask distributors to also lower prices to get the deal, it depends on the case. It depends on the country, it depends on the customer, it depends on the level of the deal, how big the deal is. It depends on a lot of things, but overall, we saw an improved margin on this business in Q3 over Q2.
Okay, thank you.
I have a question regarding this server business, so you said it's two, three years as the country spends a lot right now, so then what do you expect, let's say in two years, will the market remain flat or decrease in two years or?
Too early to say. Too early. I cannot see more than two to three years. The company cannot see more than three years. I mean, we expected the evolution to come. That's why we were preparing product-wise, human resource-wise. We kept investing in this direction. Finally happening in Q2. We knew it's going to happen. We knew that certain deals were happening, but we expected this to multiply. Finally comes in Q2. If you ask me last year, will it happen from Q1 or Q2, I couldn't know. Happen in Q2. All the suppliers that come to Cyprus, all of them, NVIDIA comes to Cyprus, all of them come to Cyprus to see us.
They keep investing because they see. So we take from them and we see customers asking for it and they give us leads for projects, projects that will not finish in six months or two years. Some projects will finish, at least you have to keep selling to them blocks and components and keep revising the overall technology of these data centers. It's not something that ends in 2025 or 2026. That's why the investments. That's why people in this believe in these companies. That's why you see high multiples of these entities because they see that this is aimed to continue. It's not something that happened in 2025 and it's going to finish.
And regarding Breezy, so do you repair the smartphones or do you?
We grade, we repair, we upgrade, we do everything.
Like repairs, like people manually.
Yes, they give it to you and they want to upgrade it or they want to exchange to a newer iPhone, say.
But is it not like much cost to repair it manually? Or the main business is just to grade and reselling it as it is.
That's why we invested all this money in Poland for this center.
Okay, so it's cheaper to repair it here.
And it's better for the environment. That's why it's funded by suppliers to do it. They don't want this to be scrapped.
Okay. Okay.
And it's much cheaper, answering your question from a different angle. If you buy a refurb 15, say, is.
I understand.
50% the price.
It's fully automated and that's why it's on.
It's automated already. There is a lot of automation going on. Therefore, less and less human intervention to grade, upgrade, refurb.
Upgrade, what is this upgrade? So I can understand it. The software inside is upgraded or what is upgraded?
A lot of things can be upgraded. I mean, it's full of scratches and you want to, you graded a C and you're asking the customers B or A. What is B? You give them the description of B, you give them the description of A, you say, I want to go A.
Okay.
150, including everything, how it looks with no scratches, including everything.
But it's grading. You cannot take this.
First, you grade it.
Okay.
And then the customer says, I want to become grade C to grade B or to grade A. How much would that cost?
Or manually somebody takes it and yes.
Or they want to exchange it. They go to Orange Poland. We have a big business with. The customer goes to one of the shops and say, I want this 15 and give it back to you. You grade it, you tell me how much you can give me back as a credit and I want to buy a 17. And Orange gives it to us to manage it.
Okay. But the grading is on the premises of yes.
Yes. [crosstalk]. I'm not very good into technical, [crosstalk] but they know how to.
I can understand.
Yes, that's how they do it.
Okay.
So it's exchange programs as well. You take the 15, you make it look better, you upgrade it from C to B or to A, whatever, and you keep selling it back to the market. At the same time, it opens opportunity because you are selling a 17 to them.
Okay.
Through Orange, through different channels.
Okay. So the factory is fully automated?
Yes.
But how many people work there just to manually?
We give numbers to this interim report. We say how many we can automate, how many we can create and upgrade on a monthly and yearly basis. We say that the focus is to further automate to make so many thousands a year. So we have targets, we have number of units.
At the moment, can you share with us how many people work there?
Not too many people because it's robotics solutions. It's automated robotics solutions, but I don't know how many people.
Okay.
50, I think people, 45, 50 people already.
So not much. Okay. Thank you.
It's not a manual work. It's a robotized work.
Hello. My question would be on the cash flow side. You had a visible increase in receivables. And I assume it's coming from the server business, right? Because building data centers is a cash-consuming business, like I don't know, 50 million per megawatt. So I believe Nebius is a brilliant customer to work with, but any delay in paying invoices is helping their cash flow profile probably. So just for the model assumptions, how much time do you need to wait for the payment of invoices in this particular business? Because the rest is
Easy 60 to 90. 60 to 90 is the average. Closer to 60, but we have deals with 90. Yeah. Insured business, therefore the customer cannot delay paying just like that. They are under pressure to pay on time. The question is that you grant and you rightly said longer days. But this is a good thing. Increasing receivables means increasing sales.
Yes, of course. Just for the model assumptions. So in the fourth quarter, you probably won't be able to improve operating cash flow much.
I know.
Because you will still see significant growth in.
But it's Q4. The shortage. Everybody wants to buy scarce product. I said memory. In Q4, we also see the memory and storage. So everybody is rushing to buy a product that won't exist in the market or exist in very low volumes. Therefore, they pay on time. They're becoming good boys. Pay on time to get the product, to make money. Because not only the distributor makes money, not only the vendor makes money, the customer makes money. So we have this historically. The trend is to improve working capital in Q4. It's not by accident that we have nine months with negative cash flow, especially operating activities, low cash position, and then something happens magic in Q4.
It's exactly this thing. It's the scarce product that is driving faster receipts from customers, therefore lower receivable days, therefore improvement in cash from operating activities, and therefore resulting in better cash position. We expect this to happen and it's happening already. Now, to what extent I said it's not an easy exercise to create another EUR 60 million -70 million or EUR 100 million, generate a positive cash from operating, but this is what we are striving to get, and I think it's feasible. It's not imaginary.
Yes. One more question on.
Before you go there. The server business comes with longer days from supply. Because on the average, you get 60 days from supply. It's not a product that is supplier gives you 30 or 45 days. They understand this throwback on distributors' receivable side. So they are there to help us increase sales for them to increase sales to distributors. So they are granting days. Yes, they are granting average 60 plus days. Yes. All these suppliers I mentioned earlier, it's not 30-day business anymore. They understand this.
So you also pay with, let's say, not a delay, but you have like 60 days to pay to, I don't know, AMD, NVIDIA and others. And then you deliver the product and it's also 60 days, right? So the net working capital should be, I don't know.
We still have the inventory days, but the inventory days for this business sometimes is not even inventory in our warehouse. It goes directly to some customers, one you mentioned earlier. It goes to specific geographic locations, not just one, directly from suppliers and dropships. So you cut down on inventory. So you have to see the whole cycle, not just the receivable. But because you mentioned receivables, I'm mentioning supplier days and I'm also touching inventory days. The three making the working capital, therefore the cash from operating activities.
Yeah, right. And I see Vertiv as one of your clients. So what exactly from their portfolio are you selling?
The screens and all the software that comes with the screens, different screens showing different stuff at the same time.
Okay, so it's not liquid cooling and I think like that.
Not for actually.
Maybe the question, yeah, as far as I remember, the CapEx per megawatt in the data center is like EUR 50 million , which is huge. And the projects are, I mean, the number of the projects is enormous. So out of that EUR 50 million , how much of the, I don't know, of that inside stuff are you able to sell to like Nebius or any other NeoCloud or anybody that is building those data centers? I mean, I'm thinking about what kind of the like total addressable market or whatever, however it's called in the U.S., is achievable for you in this business.
I'm not sure I know the answer to your question. Therefore, I will refrain from answering. I don't want to give you a very brief description. It's a very dedicated question and it's thrilling before I answer the question. I don't have this information, but it's a very good question.
Okay, thanks. Which means you probably think about like expanding those.
We want to expand and we see that the growth is happening already. I don't want to pick specific customers. That's why I don't mention customers, but for obvious reasons. But I can mention suppliers. We had certain suppliers with $10 million, $12 million, $15 million business overall 2024, and this year for the 10 months, we are exceeding $250 million. So we see the growth by customer, by product type.
Yes.
SSDs, GPUs, CPUs, memory, servers, new suppliers. Significant increases year-on-year. So the trend is there, it's obvious.
One last question from AMD and NVIDIA. What exactly are the products you sell to customers from?
Everything.
Everything.
Much more on the server side now. I mean, we have always been forever. We've been AMD, Intel, Seagate, distributors, Western Digital. Now the server piece is growing very rapidly, and we had one of the slides there to show you how rapidly is this growing. SSDs, less on HDDs because data centers take mostly SSDs, yes. GPUs, CPUs. As a slide there is very important. So we are mostly on SSDs, memories. Yeah.
Okay, thanks. So in the US, as far as I remember, you have that Bang & Olufsen stores in California or maybe.
The one is opening early December. We all go there for the grand opening in San Francisco. And then we have Palo Alto and LA.
Yeah.
Early next year.
My question would be on the server side. I mean, on that AI, I would say sales. So you also have some customers there, right?
We do.
Like in New Jersey data center, possibly?
I cannot tell you, but we have. We have in the U.S.
Okay, so how many clients do you have? I know of one for sure.
[crosstalk] We have a couple of customers in the U.S., some of which are also sourcing product for Europe, Netherlands, Germany. And they also do U.S. They also do some of them, they do Far East. But we have customers in the U.S.
Because it's the biggest market for the moment, but.
It is.
Yeah, all the others in terms of data centers are also coming.
And then when they are distributors, they have to buy from them, but they buy from us. They are our customers for quite some time. But now with the AI booming, they are buying a lot and mostly server.
So how much of the growth you see in the U.S., for example? I mean, you presented the top 10 countries. I can't remember. The U.S. were not there.
Not. U.S. I only mentioned in terms of premium retail stores, Bang & Olufsen.
No smartphones there. I mean, it's very tiny at the moment. So how the U.S. can come next year, possibly.
The U.S. is significant. It's not top 10, but it's close to top 10. Very close.
Thank you.
So you can see the numbers there on the top 10.
I have a question. So you said earlier that sometimes you don't even touch the servers when you sell it. So what's the point? You are chosen as the suppliers.
We are a good company.
Okay, so what?
We have the portfolio [crosstalk]. We have the portfolio. Not all the even big suppliers don't have the portfolio we do. I cannot tell names, but we have big companies, say in Taiwan, that are suppliers of ours. But they don't have the specific product when they design to build their own data centers and they buy from us. Because having the full portfolio, one-stop shop, we call it, to come and shop from you anything that needs to build a data center. That's one. Not everybody does it. Or if you have one or two, you don't have the portfolio to go to the customer and say, I give you a solution. They don't want 50 suppliers to build a data center.
They need one, two, three maximum legitimate good suppliers with product on the shelf to buy from. Second, you have a customer for 10 years buying maybe some more different product, then one day the AI evolution comes. They will prefer you. They know you. It's people to people, yes. So it's a know-how also. They don't prefer the people because they are friends. They prefer the people because they know exactly what they are doing. When I talked earlier about human resource investments that is driving SG&As up before the AI evolution came, now we are talking about the same thing.
I couldn't explain this in 2024 to people, and I didn't want to say exactly what we are investing on. Now we see what we are investing on. Why are we ready to grow so much sales, EUR 340 million? Because we did a lot of preparation and we did a lot of investments. Not capital nature, I said, human resource related investments. So these two are, I think, key to this success.
Okay.
Know-how, people, and portfolio.
But you just supply that it's not.
Sometimes. Sometimes. Not all the time. Sometimes there are dropships.
Don't build the data center.
No, we touch it. A lot of times we touch it or we set technicians. Yes, and we do things. Yes.
Okay.
We touch, and not all the times. Don't get me wrong. Not all the times we have dropships. Sometimes we have dropships.
Okay. Okay. So
Yes, and also you're building the infrastructure on the paper before you advise the customer what exactly they need. Sometimes they don't know exactly what they need. It's also very important. And then after sales, it's not just sell the product like a broker. No warehouse, two, three staff, and then you finish. There is an ongoing thing. There is upgrading, there is fixing, there is warranty, there is reverse logistics, there is all these things.
Hello, I have a question about the product shortages, especially on the components for servers, the time horizon that it may affect your sales and also the supply of Apple if you have enough supply for the most important fourth quarter? And do you see any changes on the market that this lack of supply could reverse?
Lack of supply, as I said earlier for the cash flow question, is positive. And usually happens in Q4 because you have higher demand in Q4. The capacity of the supplier is limited. Therefore, you have the scarce product. But this is a benefit to all of us because we expect that to happen. Actually, we see it happening already. Therefore, managing well-existing stocks is key. Overall, we benefit from shortages, not the opposite. You may lose some sales, but the margin is multiple sometimes. Therefore, the overall is a gain for the company when it has shortages.
Apple didn't come with a lot of product on launches, very limited, but they will scale up because it was receptive well to the market, yes. Maybe their strategy as well. I don't know, but usually the case, and then it picks it up, and we see a lot of demand. All these are good news for us overall.
So do you see shortages in Apple and the key markets like Kazakhstan?
Just on the NPI, then usually they pick it up. They produce more, they send more, they allow more. But they are also bundling with other products they have. Because their decision is not just to sell the 17 and abandon the rest. The new strategy is to sell everything. So I cannot talk for Apple. That's the trend we see.
Do you think by December you'll be like have full stock to realize all the potential demand?
We think so. And if not, then the margin picks up further.
Shortage is just the Q4?
Usually the case. And as I said, we started with memories end of Q3 and now we see memories and storage. That's a good thing.
I was also wondering about server contracts and if their type has changed in any way over the last quarters, especially on the prepayments. Like do you receive less prepayments? Do you realize like more extensive contracts with more bundled products?
Business as usual overall. We don't see any major differences either on prepayments or it's just that this AI evolution is giving longer terms to customers. Usually the suppliers give us average 16 more. So this has changed. As this grows bigger, the weight on the overall business has an impact. Other than this, nothing much.
Okay. Did I understand correctly that your contract in Kazakhstan for servers generated about 20% gross margin?
Yeah, it's good.
Can you explain how you realized this contract and how big it was in terms of volume?
We cannot say much. The 20% is true. So that answers the question to a lot of people. We say that is everything with 3%-4%. That's not the case. And it depends on a lot of things. It depends on the volume. It depends on how much competition it is for the project. It depends on a lot of things. It depends on the country. So there are projects with double-digit or with 20%. And we aim as we grow bigger on this AI, not to go through intermediary. Sometimes you have to. If the intermediary is not there and the know-how exists within the company, then obviously the margin is bigger, yes.
So do you expect more of this type of contracts? Many countries, they possibly.
We do.
Their strategies over the next years, and I think many government budgets will go into those projects.
We do expect more in a lot of countries.
Hello. Hello. One question from my side because we didn't touch the cash flow topic yet.
We did.
You mentioned that you were given better payment conditions from your suppliers, and on the other hand, you gave better conditions to your customers. I wonder what is the difference in days between what you were given and what you gave? Because looking at your receivables and liabilities, it looks like you gave more than you were given, and I wonder.
It's correct. This is correct. This is reflected on operating activities. Bearing in mind the 26% increase in the top line for the nine months, 29% for Q3 if you're looking into Q3. But overall, yes. But I mentioned earlier that there was another impact. There are many contributors to this. I mentioned earlier the financial income that we decided to pay certain suppliers earlier because we get the benefit.
That's why I am asking about standard conditions, not including early payments options, etc. But I assume that in this server part, you gave more on the receivable side than.
That's correct. That's a correct statement. And I admitted this before to the gentleman here, yes. We gave more and I quantified 60 days on the average, 60 plus. And we have certain deals up to 90 days, yes. Depending on the deal, depending on the margin of the deal, depending on a lot of things, depending on the volumes that are expected to come from this customer, etc.
Yes. And the question is on the difference between these receivables and liabilities change in the server segment.
What's the question?
How many days?
How many days on what? On suppliers?
Yes, on suppliers.
We get average 60 days on this business from suppliers because a lot of vendors are giving 60-90 days on this. If there are big volumes, they may grant more. They say, okay, it's a USD 50 million deal over six months or 12 months. I give you extra 30 days or 45 days. At the same time, though, we don't only stay with supplier-granted days. We have supply chain financing deals, financing lines, whereby we elect to pay later to suppliers or ask the financier, the supply chain financier, to pay 45 or 60 days after the 60 days they grant to us to fix the cash flow.
Okay.
At the cost.
Second question regarding this issue is limits for insurance. Yes. I wonder.
On the customers or from the suppliers to us?
On both sides. Both sides. Do you see any risk that you are using too much of your insurance line? And it is a problem to increase your size.
Understand. Understand.
Increas e your.
The capacity piece. Yes, I understand the question. We don't see limitations. We don't see limitations because we are a better company. Equity-wise, we are getting stronger and stronger. So they feel more comfortable to grant lines. And we don't have limits. We didn't come to a point whereby either on the supplier side trying to insure us, there is a limitation or from us to further grow the lines with these customers, there is a limit. The downside as to customers is mainly an Atradius policy , a group policy.
Okay.
No limits. We don't have any limitations, not limits. We don't see limitations.
Okay. Clear. And second area of questions is Kazakhstan. Could you break down for us what part of this 23% growth year-on-year comes from new server business and what part is just improvement in the market? Yes, because you previously mentioned that there is the credit crunch in Kazakhstan and on the other hand also illicit trading that you have problems.
Both of which are still in place. But the illicit trading has kept. They have kept illicit trading a bit because of two reasons. Maybe slide one, but a positive impact on us, a negative impact on illicit traders because of the regulation, the IMEI regulation. And also second, the dollar. As the dollar is cheaper when we are buying in dollar and they are not fixing the dollar on a daily basis with other currencies, they do it every six months. It's a favor to us. It's favoring us. It's unfavoring illicit traders. Therefore, we have a big positive impact on Apple business as well, plus the server business and the big projects.
Okay. And leaving aside server business, what would be the dynamic of Kazakhstan market?
Kazakhstan market is growing nicely, but we are growing better than the market.
I mean, your Kazakhstan market, leaving aside just the server business, yes, assuming that there is no server business in Kazakhstan, what would be the growth on this market, your growth in the third quarter?
The server business was not more than so far for. You're talking the nine months? Third quarter, let's say. The third quarter. Very small. Even EUR 20 million. The rest is mainly Apple. Not only Apple, but mainly Apple, yes. We are exclusive distributors of Apple in Kazakhstan. That is what is driving business outside the server business and the server components.
You said EUR 20 million in the third quarter 2020.
I don't remember exactly, but roughly that. It wasn't a very big number for Q3.
Okay. And last year for the same period, do you remember?
I don't remember.
Okay. Because EUR 20 million is quite a lot.
It is.
Because it would be a huge part of this growth, yes, because you grew 23 million year-on-year only.
I was looking at nine months, but yes. And the impact on Apple, the biggest impact on Apple, as I mentioned on the NPI, will happen in Q4 because the introduction only started end of September, I said.
Okay. Thank you very much.
Maybe last question. So you're taking over this Matrix Media, as I remember, that is reselling Samsung. And what are your plans regarding Samsung? Can we expect something from the company?
We expect to add other products into this retail store to make more profits, to refine the product mix. We are keeping the management of the stores, but we have our corporate policies to overlook what they do and how they do. We are not putting all ASBIS people there. We're keeping the people, all the people. I was part of the deal, and we want to make money out of this. Much bigger than money that they used to make.
Do you plan solely to develop stores or maybe also develop?
To develop existing stores for the time being. The existing stores to make them, to refine them, to make more money out of these stores, and then we see.
Okay.
Expansion possibly.
I mean, not the stores, but like distribution of Samsung?
One by one. One by one. First the stores.
Okay.
Enough? Okay. We are ready to take more questions outside.