Earnings call transcript: MIPS Q2 2025 shows strong growth amid challenges

MIPS AB reported a solid performance in its Q2 2025 earnings call, with a 12% organic growth and an improved gross margin, despite a 22% drop in EBIT and significant legal expenses. The company’s stock price fell by 2.31% pre-market, reflecting investor concerns over financial pressures and market challenges.

Key Takeaways

• MIPS achieved a 12% organic growth in Q2 and a 23% increase year-to-date.
• Gross margin improved to 74.2% from 72.9% the previous year.
• EBIT decreased by 22% to $41 million due to higher legal costs.
• The stock price dropped by 2.31%, influenced by financial pressures and tariff impacts.

Company Performance

MIPS demonstrated resilience in Q2 2025 with a 1% increase in net sales and a notable 12% organic growth. The company strengthened its gross margin to 74.2%, up from 72.9% last year, indicating efficient cost management despite challenging market conditions. However, EBIT fell by 22% to $41 million, primarily due to escalating legal costs. InvestingPro data reveals the company maintains robust financial metrics with a current ratio of 7.64x and negligible debt-to-equity of 0.02, suggesting strong operational efficiency. Subscribers can access 16 additional ProTips and comprehensive financial analysis in the Pro Research Report.

Financial Highlights

• Revenue: 1% increase year-over-year
• Organic Growth: 12% in Q2, 23% year-to-date
• Gross Margin: 74.2% (up from 72.9% last year)
• EBIT: $41 million (down 22%)
• Operating Cash Flow: $18 million
• Cash Position: SEK 244 million, with no loans

Market Reaction

MIPS’ stock price decreased by 2.31% in pre-market trading, reflecting investor concerns over the company’s declining EBIT and significant legal expenses. This movement places the stock closer to its 52-week low, highlighting market apprehension despite positive growth metrics.

Outlook & Guidance

Looking ahead, MIPS aims to achieve SEK 2 billion in sales by 2029, with expectations of accelerated organic growth in the second half of the year. The company anticipates around 20% growth in Q3, driven by geographic expansion and new product categories. InvestingPro analysis shows strong analyst confidence, with 2 analysts revising earnings upward for the upcoming period and a consensus target price suggesting potential upside. The company’s revenue CAGR of 13% over the past five years demonstrates consistent growth execution.

Executive Commentary

CEO Max Stradwitz expressed confidence in the company’s strategic direction, stating, "We have navigated well in the quarter. Good development despite challenging conditions." He emphasized untapped opportunities, noting, "There is still a lot of untapped opportunities in helmets."

Risks and Challenges

• US tariffs continue to impact production costs, necessitating relocation efforts.
• Legal expenses remain high, affecting profitability.
• Consumer spending in the US remains cautious, potentially impacting sales.
• Market saturation in key categories could limit growth.
• Currency fluctuations may affect international revenue.

Q&A

During the earnings call, analysts inquired about the impact of tariffs and production relocations, legal costs, and market penetration strategies. MIPS addressed these concerns by outlining its growth strategies and confidence in navigating market challenges.

Full transcript - MIPS AB (MIPS) Q2 2025:

Conference Operator: Good day and thank you for standing by. Welcome to the MIPS Interim Report Second Quarter twenty twenty five Webcast and Conference Call. At this time, all participants are in listen only mode. After the speakers’ presentation, there will be the question and answer session. To ask a question during the session, you need to press 11 on your telephone keypad.

You wouldn’t hear an automated message advising your hand is raised. To withdraw a question, please press 11 again. If you wish to ask a question via the webcast, please use the Q and A box available on the webcast link anytime during the conference. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Max Stradwitz, CEO.

Please go ahead.

Max Stradwitz, CEO, MIPS: Thank you, operator. Good morning, everyone. My name is Max Stradwitz. I am the CEO of MIPS. And with me today also presenting, I have our CFO, Karin Rosenthal.

We will take you through the MIPS Q2 twenty twenty five result presentation. And if we start with the key highlights of the quarter, we saw good development in the quarter with 12 organic growth in the second quarter despite very challenging conditions. Year to date organic growth is now at 23% plus. The rapid implementation of tariffs did have a significant impact on sales across all the three categories. However, we did see that the sales improved over the course of the quarter as the effects of the tariffs became a bit more predictable.

We did see volume growth on The US market despite all the challenges. We did have a slow start at the beginning of the quarter due to tariff uncertainty. Europe continued with unchanged momentum during the quarter, which we were very happy about. We did see an EBIT decrease in the quarter, fully explained by legal costs and the negative impact from the ForEx effect. We will come back to a little bit to that later in the presentation.

And as we see these effects as temporary, we remain confident on the long term strategy and our financial targets. In terms of the current situation and the expected impact from tariffs, we did see that the rapid implementation of tariffs brought uncertainty to the short term outlook in all our three categories in The U. S. Market. A lot of our helmet brands have taken price increases to mitigate the own cost from tariffs, and the price increases have been well accepted by the retailers.

Just for reference and important to understand that in 2024, 53% of MIPS sales was to US based brands. These products are then, of course, sold all over the world. Brands from other parts of the world are then, of course, also exporting to The US. Our assessment is that a bit more than 50% of the volume that we do land on The US based market. We do see that Hemat brands have started to relocate production outside China to de risk the potential impact of further tariffs.

And we continue to expect short term demand swings from the implementation of tariffs. If we then look at Sport, we are really happy to see that the progress continues. We did achieve a 3% net sales growth in Sport. If we adjust for current effect in Sport, we did see 13% organic growth despite the effect of the implementation of tariffs. Good performance in bike, and we did actually see growth, volume growth in the quarter for seventh times in a row, which is, of course, extremely strong.

And also, we did see strong growth in snow despite that we had a very strong prior year comparator. Just to remind you, last Q2 last year, we grew 60% in snow, so we were up against a very tough comparator. But despite that, we managed to deliver strong growth also in the snow subcategory. We did see volume growth in The US market despite the tariff uncertainty. Europe continued to develop well and in line with our ambition, and we are happy to say that we actually managed to deliver again above 50% growth on the European market.

We have just finished Eurobike a couple of weeks ago, and Eurobike is the biggest bike show in the world. Two great news from us. First of all, we launched our new MIPS AERNode Pro version in bike, which is our lightest version and belongs to the AIR family with a lot of new great features. And we also launched our new mobile event concept, which will also roll out to a lot of B2C events and also part of our strategy of doing a lot of more public events and so on. And I’m sure that you will see it at an event close to you.

Both of these were very well accepted both by the visitors and, of course, our customers at the show. And as we see that we are doing a lot of progress despite the very erratic behavior around us, we have a very long term positive on the outlook of the sport category. In motor, we saw softer performance with a decline of 28% in the quarter, fully explained by the implementation of tariffs. Our presence in Moto is smaller and there, of course, we don’t get as much priority among the brands. And of course, we also saw a negative impact from the strengthening of the Swedish krona, so the Forex impact.

And as we are investing in Moto, we did welcome two new athletes during the quarter. The first one being Georg Prado, which is one of the most decorated MX riders in the world. Last year, he won the MXGP Circus. He now has entered into Supercross in The US, and we are really excited to have him on board as another ambassador in the MX subcategory. And then we also have managed to sign Sean Mear, which is the former world champion in MotoGP.

So two great ambassadors and two great athletes that will help us building the awareness in the motor category. Even though it was soft performance in the quarter, we expect it to bounce back and no change to the long term outlook. Still great opportunity to continue to grow in this category. In safety, similar to motor, we saw soft performance with 12% net sales growth. Also here, we saw an impact of the delays in ordering due to the tariff effect.

No change to the assumption. We still get a lot of new brands and of course launch a lot of new products on the market. The ones that are following us on LinkedIn did see that we last night announced a partnership with the key helmet brand, Bullard. They are one of the larger helmet brands in the industry. And it’s also good to know that the founder of Bullard, Edward W.

Bullard, actually is considered to be the inventor of hard hats. So great to have them on board, and we’re really excited to partner up with this iconic helmet brand. If we then look at the development of net sales in our category, Sports, 30% organic growth with growth both in bike and snow, which we are very pleased with, especially given the challenging situation around us. Moto, soft performance will bounce back coming quarters. And also in safety, no change to our long term ambition.

With that, I hand over to Corinne.

Karin Rosenthal, CFO, MIPS: Good morning. I’m Corinne Roksenthal, CFO of MIPs, and I will take you through the financial part of the presentation. We saw a good development in the second quarter with an increase in net sales of 1%. And adjusting for currency effects, which was 11% due to a stronger CEC versus U. S.

Dollar, net sales increased 12% organically. Gross profit increased with 3%, and we saw a strong gross margin of 74.2 versus 72.9% last year. And the increase is mainly explained by the sales mix. In OpEx, we continued to invest in our strategic priorities, and it was also negatively impacted by legal costs of $14,000,000 in the quarter. EBIT was down 22 to $41,000,000 compared to $52,000,000 last year, and the EBIT margin decreased by 8.8 percentage points to 30.1% compared to 38.9% last year.

And operating cash flow amounted to €18,000,000 versus €29,000,000 last year. If we look at the financial KPIs 12% organic growth, 30% in EBIT margin, and $18,000,000 in operating cash flow. If we then look at the development for the first six months, net sales increased with 16%, and adjusting for FX due to a stronger SEK versus US dollar, net sales increased 23% organically. Gross profit increased with 19%, and we saw a gross margin of 73.2% versus 71.6% last year. And the increase is mainly explained by a favorable sales mix.

In OpEx, we continued to invest in our strategic priorities, R and D and marketing, and it was also negatively impacted by legal costs of 23,000,000 EBIT was down 1% to $65,000,000 and EBIT margin decreased by 4.4 percentage points to 25.9% versus 30.3% last year. We saw a good operating cash flow of 55,000,000 versus 20,000,000 last year. And the financial KPIs organic growth of 23%, EBIT margin of twenty six percent and fifty five million dollars in operating cash flow. If we then look at the balance sheet and cash flow, we have a strong cash position and we don’t hold any loans. We had cash and cash equivalents of SEK244 million.

We paid out SEK172 million in dividend in May, corresponding to SEK6.5 per share or 122% of net earnings. And the operating cash flow in the quarter amounted to SEK18 million, and we had the equity ratio of 85%. And then I hand over to Max.

Max Stradwitz, CEO, MIPS: So if we then summarize the quarter. Thank you, Karin. We have navigated well in the quarter. Good development in the quarter despite the challenging conditions that we saw. All the three categories heavily impacted by the implementation of the tariffs.

We did see that the situation improved at the end of the quarter. We expect some uncertainty short term, but no, not to the great extent that we saw during the second quarter. And we remain positive on our long term outlook and the delivery of our financial targets. And with that, we open up for questions.

Conference Operator: Thank To withdraw your question, please press 11 again. Alternatively, you can submit your questions via the webcast. Please standby, we’ll compile the Q and A roster. This will take a few moments. And now we’re going to take our first question.

And it comes from the line of Adela Dachian from Jefferies. Your line is open. Please ask your question.

Adela Dachian, Analyst, Jefferies: Thank you. Good morning, Max and Karen. A couple of questions from me. If we start with the the sales development during the quarter, are you able to explain why the bike category is, I guess, a bit more resilient than motor and safety despite also being affected by the same type of tariff headwinds. Is it mostly due to inventory levels still being not normalized yet within that category?

And then also on motor and safety, you are in the text explaining that some of your customers are strategically focusing more on their own measures such as relocating factories and so on, which is resulting in project delays. How confident are you of a comeback already in H2?

Max Stradwitz, CEO, MIPS: Yeah, so I think first of all, when it comes to priority in supply chain and with our key customers, as you say, bike and also snow, there, of course, we have quite a lot of volume. When the factories started up again their production for The U. S. Market, of course, for them, it was key to get the volume out as quick as possible. Of course, they prioritize the high volume sellers.

Since we have gotten quite far when it comes to bike and snow, they prioritize the high volume runners. And, of course, we are there already in snow and bike. And of course, in motor and in safety, where we normally start with the more premium products and so on, sometimes, of course, you get down prioritized. So that’s what happened in Q2, not something that I’m worried about long term and something that has happened before. So bike and snow, a lot higher volumes, they do get priorities in the factories.

Then, of course, we did return back to growth already during the second quarter. We saw a good momentum. What we saw during Q2, at least from MIP’s point of view and I think from the world point of exceptional. And of course, it’s not the normal condition. So yes, we do expect to bounce back already in Q3.

Adela Dachian, Analyst, Jefferies: Got it. And then on the gross margin, can you explain a bit what you mean here by the sales mix being favorable?

Max Stradwitz, CEO, MIPS: Yes. So first of all, we did a little bit less of projects during Q2 because, of course, our customers focused a lot more on relocations. Projects normally have a lower margin, and by having lower margin, you can increase the sales mix. And then, of course, also we saw some favorability in cost. So overall, really good performance on gross margin.

Adela Dachian, Analyst, Jefferies: If customers then return to more normal project pace in H2, then we shouldn’t expect the same type of margin uplift?

Max Stradwitz, CEO, MIPS: No, I think I mean, focus for this year, I think, will still be a lot on relocations because, of course, everyone are worried about what’s happening in the world, and they want to derisk their supply chain. I think the exceptional margin that you saw in Q2 of 74.2%, I don’t think that’s to expect going forward. We said that we expect 70% long term, and that’s still valid. But indeed, it was a very good strong margin in Q2.

Adela Dachian, Analyst, Jefferies: Great. Thanks for that color. And then just lastly on this lawsuit or legal dispute, I saw that the legal costs were higher now in Q2 versus Q1. Is there an expectation that it will continue to trend upwards as your customer is getting closer and closer? And just overall, do you have an update on what’s happening timing wise with that lawsuit?

Max Stradwitz, CEO, MIPS: Yeah. As we’re still in the preparational phase, of course, costs are quite high. I think it’s fair to assume what we had year to date. You can assume also a year to go. So basically doubling of the legal costs that you have seen so far, I think that’s fair to assume.

And like I said, in these cases, you can do a lot of different things, but from MIP’s point of view, of course, it’s really important to take these things serious. There is about someone else’s IP rights, which we don’t think is right, and then of course we want to act. It’s part of our business model and that’s why we want to prepare in the best possible way. You don’t want to go into these sessions unprepared, and that’s not what we plan to do, and that’s why you see more cost. These things are, of course, really, really expensive, but for us, something that we are very committed to do.

Adela Dachian, Analyst, Jefferies: Sorry. I just wanna confirm I heard the right thing. So are are we expecting a doubling from what you’ve already paid in in h one going forward?

Max Stradwitz, CEO, MIPS: Or No. The same same run rate. So I think you have 23,000,000 in the first six months and then probably somewhere in the same range for the second half.

Karl Dienberg, Analyst, D&B Carnegie: Got it. Got it.

Adela Dachian, Analyst, Jefferies: Then just lastly, if I may, and then I will step back. On safety, are you still targeting the same type of guidance range that you’ve provided before in terms of sales?

Max Stradwitz, CEO, MIPS: Yes. There is nothing that has changed. We are now going into the very heavy fare season. We have ASSP coming up next week. Then we have NSC in The U.

S. In Denver in September. And then in November, we have A plus A, which is the world’s biggest construction fair only happening every second year. So there is a lot of momentum in the category, and we’re really happy about that. So no change.

Adela Dachian, Analyst, Jefferies: Okay. That’s all. Thank you.

Conference Operator: Thank you. Now we’re going to take our next question. And the question comes from the line of Gustaf Hagos from SEB. Your line is open. Please ask your question.

Gustaf Hagos, Analyst, SEB: Thank you. Good morning, guys. Thanks for taking my questions. If I was to return to organic growth, so 12% in the quarter, you say accelerate towards the end of the quarter, but not back to the level that you saw in Q1, which I believe was just above 40%. And I believe fact, the consensus is that they’re around 29% organic for Q3.

But could you sort of indicate if you see an acceleration in H2 versus H1, you’re now 23% year to date, right, in organic growth? Or where do you think your growth is at the moment going into July and so forth?

Max Stradwitz, CEO, MIPS: Yes, we do expect an acceleration versus the 23% organic growth you see year to date.

Gustaf Hagos, Analyst, SEB: Yeah. And that’s already in Q3, or is that more of a Q4 story?

Max Stradwitz, CEO, MIPS: No. I think it’s for the balance of the full H2. I think you will see maybe a little bit or around the same figure in q three and then, of course, trending upwards in q four.

Gustaf Hagos, Analyst, SEB: So plus 20% ish q three is not a bad guess then. I realize you don’t have all the transparency, but

Max Stradwitz, CEO, MIPS: Yes, based on that assumption, yes.

Gustaf Hagos, Analyst, SEB: Good. And then sort of looking a little bit longer term than your targeted SEK 2,000,000,000 by 2029 in terms of sales, From then from what did you see now from 2025, do you still you believe you’re still on the trend to achieve that? And where do you see sort of the steps to getting that? Where do you expect more growth versus a little bit less perhaps on that journey towards the 2,000,000,000?

Max Stradwitz, CEO, MIPS: Yes. I think, I mean, if you look at last quarter and also the quarters before, we were, of course, trending that on that level. We expect to continue to trend above that level. Of course, we have a couple of different strategic priorities. The first one and most important one is to grow with the customers we already have.

Of course, U. S, we have been doing well. Even though it’s a very challenging market, we have still managed to grow on that market. Europe, you saw yourself 50% organic growth in the quarter, and we continue to deliver our strategic ambition to get Europe to where U. S.

Is, which is going quite quickly. And we see that we’re increasing the penetration really quickly on the Europe market. Then we have a strategic priority also, of course, to win in kids. For us, it’s really important to get also bigger penetration of kids’ helmet and then also getting into new channels and markets. Safety is also a big priority.

If we exclude Q2, which is not a normal quarter and, of course, an exceptional quarter, I think we are delivering quite well on that ambition.

Gustaf Hagos, Analyst, SEB: But and if you see then that perhaps 20 short 30% growth this year, where do you see sort of the as you see it now, the steps towards the SEK 2,000,000,000 by 2029, you see that growth should pick up then year over year in 2026? Or is 2027, 2028 more you think reasonable to assume where you have a pickup in growth to get to the €2,000,000,000 Yes.

Max Stradwitz, CEO, MIPS: I think that the normal situation was, of course, that we see this already happening in 2025. Then, of course, we didn’t plan with the tariffs. I think that will bounce back, and we will come back to a more normal running rate over time. Like we said, if you take 2029 number, divide by the years, you get to a growth slightly above 30%, and that’s what we should be trending at going forward.

Gustaf Hagos, Analyst, SEB: And I noticed you mentioned new markets as part of that strategy. Is that geographical markets? Or do you see that there are adjacent categories where you might expand? I noticed you’re I mean, you’re not very active in the ballistic helmet, for instance, and times are changing, and maybe that could be a growth driver for

Max Stradwitz, CEO, MIPS: you if you were to focus on that? Or are you having Yeah, mean, few have more questions opportunities the when it comes to market. One is, of course, to continue to grow in doing geographic expansion. There, of course, you have Asia, which is very interesting for us and something which has become a bigger part of our portfolio and something that we see developing quite well also over time. Last quarter was down a little bit.

But if you look over time and the rolling twelve months, we have quite good performance in Asia. And then for us, today, we are engaged in nine subcategories. Of course, we’re always looking into getting into new subcategories. Our Strategy 2029 is called Heads. And the reason for that is we focus on helmets.

That’s where we still see a lot of opportunity and, of course, being able to go into a lot of new categories. So there is still a lot of untapped opportunities in helmets, military helmets, fire brigade helmets, police helmets. There is a lot of new areas which we can go into. Just in the industrial safety, you also have mining helmets, offshore helmets, logistic helmets. So for us, it’s more that when we go into a sector, we want to understand the injury criterias.

We do quite a thorough job to really understand the accident scenarios and then, of course, make sure that we have a relevant solution for those type of helmets. So there is, for sure, new opportunities that we can get into when the time is right.

Gustaf Hagos, Analyst, SEB: And coming back then to the my final question on the legal costs, guide here for another roughly SEK 23,000,000 perhaps in H2, so SEK 40,000,000, 45,000,000, 50,000,000 for the year. Is that do you think it will be are there what’s the likelihood that this is going to trend also into 2026 that you’ll have costs related to this specific issue also in next year? Should we assume that you would get a delta of, say, €26,000,000 or €46,000,000 earnings next year then from not having to pay these legal fees?

Max Stradwitz, CEO, MIPS: I mean, it all depends on how the case develops. Of course, like I said explained, this is in the preparatory phase, and we spend a lot of money in the preparatory phase because we want to prepare ourselves. Normally, as these procedures are normally quite long, you spend a lot of money in the beginning, then you normally go into a little bit of vacuum if needed, so you will probably not have the same magnitude of cost over time.

Gustaf Hagos, Analyst, SEB: And when is the actual court date or hearing?

Max Stradwitz, CEO, MIPS: We don’t know yet.

Karl Dienberg, Analyst, D&B Carnegie: Okay. All

Gustaf Hagos, Analyst, SEB: right. Thank you. Those were my questions.

Max Stradwitz, CEO, MIPS: Thank you.

Conference Operator: Thank you. Now we’re going to take our next question. And the question comes from the line of Karl Dienberg from D and B. Carnegie. Your line is open.

Please ask your question.

Karl Dienberg, Analyst, D&B Carnegie: Thank you very much. Good morning, guys. So a couple of ones from my side. Maybe coming back a little bit to if you could just talk a little bit about the underlying market trends, excluding market shares and so on, maybe what you’ve seen on if you have any rough estimate of what the sellout development, for example, has been in The U. S.

And Europe on helmets And here also, if you could talk a little bit on the price adjustments you’re quantifying. I guess these are quite isolated to The U. S. Or has there been any impact also on the European market from price?

Max Stradwitz, CEO, MIPS: Yes. So the latest market data is still Q1 data because, of course, the new market data for The US market is not coming until July. So you need to bear with me a little bit with that. But if you look at Q1 data for The US market, you saw few percent down when it comes to the bicycle helmet market. So the consumer are still a little bit careful on their spending.

When it comes to the snow helmet market in the first quarter, it was actually up 8% in volume and actually up 12 in price. So there, of course, you saw very positive momentum in the snow helmet category and so on. And of course, we also see that. So still a couple of weeks until we get the Q2 reporting. I think the overall assessment is that The U.

S. Consumer is still a little bit more careful and so on. We see that rider engagement in The U. S. Market is going up, so more people are bicycling.

But still, that does not translate yet into improved consumer behavior. This can, of course, change. But at the moment, careful US consumer. If you then look at the European market, it’s very difficult to get consolidated data because it’s country by country. But if we look at the countries where we see very positive development, Germany is doing exceptionally well.

We see a lot of the reporting also from external retail partners and so on that they also see good German market, and we do see that also. France is also doing relatively well for us and so on. So we are gaining a lot of traction in the European market, and we see that that consumer is coming back. It’s important to know that it’s still from relatively low level. Europe has been a little bit more of depression than The U.

S. Market, but of course, we see that the Europe consumer is coming back relatively quickly. Then when it comes to the price increase, of course, price increases on The US market has been somewhere around 10% to 15%. Rest of the world, much fewer because, of course, it’s difficult to translate the tariff increases into price increases and so on. So much less and more inflationary type of price increases that we see.

Karl Dienberg, Analyst, D&B Carnegie: Yeah, yeah. And maybe following up on that, I mean, I appreciate that you report the geographical exposure on on the customer and the dominant side. But do you have any rough estimate on on what the sellout sellout mix between, let’s say, Europe and The US is for you now?

Max Stradwitz, CEO, MIPS: Yeah. Since Europe is is gaining a lot of traction, it used to be, like, 50%, 30%. So 50% US market, 30% in Europe for MIPS. But, of course, as we’re increasing penetration quite quickly, we see that Europe is increasing in penetration quite fast and outgrowing, of course, for us, The US market.

Karl Dienberg, Analyst, D&B Carnegie: Yeah. Yeah. Yeah.

Max Stradwitz, CEO, MIPS: And then I think the key issue at the moment is today with the challenges of the tariffs, there is more products being sold out than actually being bought in. So the hesitation that a lot of brands have during the Q2, of course, resulted in that they do not replenish at the rate that product is being sold out. So of course, that will, of course, also be a problem long term if that continues.

Karl Dienberg, Analyst, D&B Carnegie: Yeah. Yeah. Well and maybe one final from my side, coming back to safety and the announcement of the partnership yesterday. Obviously seem to be quite a sizable player. I just wanted to ask if you have any updated estimate or or appreciation of of how much of the size of the TAM and safety that your total partnership base now covers?

I think you used to give a comment on this Yeah. Couple of quarters ago, and obviously, you’ve been adding quite a few since.

Max Stradwitz, CEO, MIPS: Yeah. I mean, we’re very happy with the partnership with Bullard. It’s quite a organic brand, really strong market position, not only in The U. S, but also in the whole world. They are one of the bigger players.

We used to say that we had a customer base that represented somewhere around 30% to 40% of our addressable market. With Bullard, we could probably assume that we are closer to the 40% than the 30%.

Karl Dienberg, Analyst, D&B Carnegie: Okay. Great. That was everything for me. Thank you.

Max Stradwitz, CEO, MIPS: Thank you.

Conference Operator: Thank you. Now we’re going to take our next question. And the question comes from the line of Daniel Thorson from ABG Sundal Collier. Your line is open. Please ask your question.

Daniel Thorson, Analyst, ABG Sundal Collier: Yes. Thank you very much. Quite a lot of questions

Max Stradwitz, CEO, MIPS: No, we have not seen that effect. Probably on the contrary, that they are more lacking supply rather than getting too much of it.

Daniel Thorson, Analyst, ABG Sundal Collier: Okay. And is that the case for all the categories? Or

Max Stradwitz, CEO, MIPS: No. I think, I mean, the the main one is, of course, bike as we are in the bike season because that’s where we see most of the helmets being sold in in The US. Snow market, we were a little bit worried about in the last call. That said that production needs to start again after the vacuum that we saw in the beginning of the quarter as we now see that we were delivering quite strong growth in snow in the second quarter despite a very strong growth or prior year comparator of 60% growth, you can assume that, that production actually started to happen and so on. So we see good momentum also there and that a lot of the brands have prepared themselves well also in snow for the coming season.

Daniel Thorson, Analyst, ABG Sundal Collier: Okay. I see. And then I have a second question on the motor market. Did you have any progress in the road market worth talking about really? Or is there any main other topics being in the motor product market?

Max Stradwitz, CEO, MIPS: No, I think for us, it has been much easier to penetrate the MX market. We have, I think, twothree of all the podiums in the MX circuit and in Supercross, so really good penetration there. There, of course, they tend to use a lot of protective equipment and so on. So there it has been a really good market to penetrate and so on. When you look at the road, it’s a little bit more traditional market.

But of course, also signing a new MotoGP rider means that we are serious of entering into that market, and you will also see a lot more road helmet models being rolled out in coming quarters. So yes, it has taken a little bit longer time, but it’s still as relevant. And we all have actually quite a lot of success also on that market. We did develop a couple of new technologies in the last year where our fabric solution, which is INTEGA TX, is of course a very important one to really enter into that where we deliver the whole padding system. And in total, we have done 15 projects with that.

That is being rolled out to the market and, of course, both increasing revenue, but also our penetration into the on road market.

Daniel Thorson, Analyst, ABG Sundal Collier: Okay, interesting. That’s it for me. Thank you very much.

Karl Dienberg, Analyst, D&B Carnegie: Thank you.

Conference Operator: Thank you. Now we’re going to take our next question, and it comes from the line of Emmanuel Janssen from Danske Bank. Your line is open. Please ask your question.

Emmanuel Janssen, Analyst, Danske Bank: Good morning, Max and Karin. Thank you for taking my questions. And just looking at the end of this quarter, given that you have seen this sequential improvement throughout the quarter when it comes to, I assume, volume growth. Is it fair to assume that you have seen growth in all of your fee segments now by the end of this quarter?

Max Stradwitz, CEO, MIPS: Yes.

Emmanuel Janssen, Analyst, Danske Bank: Okay. Good. And jumping to this boulevard announcement, I think if you read on their own web page, I think they claim that they sell around 6,000,000 helmets per year. Is that mainly in The U. S.

Or is this globally? And should this this maybe be seen as one of your top five biggest collaborations today in in terms of helmets number of helmets sold?

Max Stradwitz, CEO, MIPS: Yeah. I think, first of all, I mean, the the big market is, of course, The US market. They are really an iconic brand in The US, but they have quite good distribution all over the world. Since we started yesterday or announced yesterday, of course, they are still not top five of the customers, but of course, there is a lot of potential in that collaboration.

Emmanuel Janssen, Analyst, Danske Bank: Yeah. Great. And maybe final one for me then. You’re talking about the in the CEO’s comments about the reallocation of production for your from the manufacturers. How far have or how much of the production is reallocated today and how much you think will be and where is it heading?

Max Stradwitz, CEO, MIPS: Yes. I mean, it’s going quite quickly in terms of the ambition to relocate and so on. And there is a lot of activity. Main part of the volume is today going to Vietnam. Six new factories have been open only during the last years and so on.

Even though there is a big ramp up of the activity, I still estimate that not even 10% of the total helmet volume will be produced in Vietnam. So it will take a little bit of time. If we look at the shoe industry that did the same transition some years ago, it took around ten years to fully relocate everything to Vietnam. I think it will go quicker, but it will at least take a couple of years before you have a substantial volume in Vietnam. Some of the bigger brands move quicker because, of course, they get priority, but it will still take some time before Vietnam will be a bigger part of the helmet manufacturing world.

Emmanuel Janssen, Analyst, Danske Bank: Okay. Great. That’s very clear. Do you think the impact near term term can be due to this reallocation?

Daniel Thorson, Analyst, ABG Sundal Collier: Yes.

Max Stradwitz, CEO, MIPS: Think from MIPS, I mean, when necessary, we move the tooling with the brands. It normally takes a couple of weeks, so not a big disruption in terms of that. Sometimes, of course, they halt production, then they produce a couple of months later in another factory, but nothing that will be that disruptive disruptive as such and so on. So no dramatic effect to be seen.

Emmanuel Janssen, Analyst, Danske Bank: Perfect. Well, thank you, Max. That was all my questions for now.

Conference Operator: Thank you. There are no further audio questions and I would now to hand the conference over to your speaker for any written questions.

Max Stradwitz, CEO, MIPS: Yes. So the first question is from ABC Helmet. I’m not sure who that is, but it is, has the MIPS solution shown to improve brain protection in the safety category? And of course, what NIPS tried to do, we tried to redirect energy as we are the market leader. We took a decision, of course, to always rely on third party validation.

So when we entered into the category, we did a lot of external testing, both at the state laboratory at VTI, where we evaluated MIPS for tangential forces in three different directions. We looked at falling objects and we looked at moving objects and then, of course, in fall accidents, of course, with good results in all of the three different types of accident criteria. Since then, of course, a lot of more further validation has been done in the area. So yes, we have done that. And with all investors or brand partners, you’re more than welcome to visit the MIPS test lab, and we will show you a little bit more on what we have done in the area.

Then, of course, the second question is that we have €200 €300,000,000 on the balance sheet, And there is a question why the financial income is more or less zero. Maybe over to you, Corinne, to answer that question.

Karin Rosenthal, CFO, MIPS: Yes. So currently, we have all our money as cash at bank. So what we did this quarter was that we paid out dividend of SEK 172,000,000. So we paid out more than net earnings, 102% of net earnings.

Max Stradwitz, CEO, MIPS: Yeah.

Conference Operator: Yes.

Max Stradwitz, CEO, MIPS: And then there is a question again from ADC Helmet, when can we anticipate to see results from legal costs? I think in all these legal cases, it’s very difficult to anticipate when things will happen. We invest in this process because we think it’s the right thing to do. We want to make sure that we have the right rights on the market. MIPS technology or patents is not included in the process.

It’s about someone else’s rights, which we want to make sure is the right ones. And therefore we invest in the process. But of course, you can never anticipate when you will have a result of any legal process. Then there was a question on Asian and Australia and that it was slightly down versus prior year. And yes, you’re right, we have had fantastic growth on the Asian market.

We have seen a little bit more careful consumer in China especially. And of course, we see that that consumer is coming back a little bit. We see also a lot of incentives from the Chinese government and so on. I’m not that worried about the Chinese market. We see that we are increasing market share and penetration, and I believe that that will base back.

Then how confident are you on the success of your patent case? That again comes from this ABC helmet and it’s not our patent case. So of course, we can’t be confident at all about our patent case. And then there is a long question. How will your two new sales professionals in The US help to sell into 40% of the TAM.

And of course, when we add people, it’s not like they go and physically sell helmets on The US market. Our job is an educational job. We are an ingredient brand. So of course, we partner up with a lot of our helmet brands. That’s our success model.

And that’s, of course, how we gain leverage and really leverage the ingredient brand model. So no, they will not go physically to everyone, but more help on educating the market on what MIPS does and why we are relevant also also in the safety category. I think that’s all the questions that we have been seeing also electronically. Thank you, everyone, for listening in to the call. Hope that you have a fantastic summer.

At least we will have that now when we take holidays for a couple of weeks and then speak to you again after the Q3 result announcement. Thank you, everyone, for listening in.

Conference Operator: This concludes today’s conference call. Thank you for participating. You may now all disconnect. Have a nice day.

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