Earnings call transcript: RevolutionRace Q1 2025 sees strong growth

RevolutionRace (REVR) reported robust financial results for the first quarter of 2025, showcasing a 15% growth in net sales, reaching SEK 392 million. The company's stock responded positively, rising 8.41% to SEK 61.20, reflecting investor confidence in its performance and strategic direction. Despite a slight decrease in gross margin, the company maintained a strong EBIT margin of 19%, up from 16.3% last year. According to InvestingPro data, the company's impressive financial health is supported by a strong current ratio of 6.93 and zero debt position, indicating robust liquidity management.

Key Takeaways

• RevolutionRace's Q1 net sales grew by 15% in local currencies.
• EBIT margin improved to 19%, reflecting operational efficiencies.
• The stock price increased by 8.41% following the earnings release.
• Strong performance across all regions, particularly in the Nordics and DACH region.
• New product launches and store openings contributed to growth.

Company Performance

RevolutionRace demonstrated solid growth in Q1 2025, with net sales increasing by 15% in local currencies. The company achieved significant growth in the Nordics and the DACH region, with increases of 19% and 18%, respectively. Despite a challenging market environment, the company maintained industry-leading margins and reported a net cash position of SEK 163 million.

Financial Highlights

• Revenue: SEK 392 million, a 15% increase in local currencies.
• Gross Margin: 69.6%, slightly down from 70% last year.
• EBIT: SEK 75 million, with a 19% margin, up from 16.3%.
• Proposed Dividend: SEK 1.35 per share, a 13% increase.

Earnings vs. Forecast

RevolutionRace's actual earnings performance was not detailed with specific EPS and revenue forecast comparisons. However, the company's robust growth and operational efficiency suggest a positive surprise relative to market expectations.

Market Reaction

Following the earnings release, RevolutionRace's stock surged by 8.41%, closing at SEK 61.20. This movement places the stock near its 52-week high of SEK 64, indicating strong investor sentiment. The stock's rise reflects confidence in the company's strategic initiatives and future growth prospects. InvestingPro analysis shows the stock has delivered impressive returns, with a 73.33% gain over the past year and a 29.64% year-to-date return. InvestingPro's Fair Value analysis suggests the stock may have additional upside potential. For detailed valuation insights and 10 additional ProTips, consider exploring InvestingPro's comprehensive research platform.

Outlook & Guidance

Looking ahead, RevolutionRace is entering its peak season from November to December, expecting continued growth in the early weeks of Q2. The company plans to focus on marketing efficiency and gradual inventory reduction. Additionally, there is potential for further physical store expansions. With its debt-free balance sheet and strong liquidity position, the company appears well-positioned to fund its growth initiatives. Access the full InvestingPro Research Report for comprehensive analysis of RevolutionRace's growth strategy and financial outlook, along with expert insights and peer comparisons.

Executive Commentary

CEO Paul Fischbein highlighted the company's strong customer offering and emphasized its growth ambitions: "Our aim is to grow at 20% while maintaining an EBIT margin of 20% on a full-year basis." He also noted the company's strategy to target existing customers while attracting new ones.

Risks and Challenges

• Currency effects negatively impacting reported revenue.
• Tariffs affecting the U.S. market.
• Potential supply chain disruptions.
• Market saturation in key regions.
• Macroeconomic pressures influencing consumer spending.

Q&A

During the Q&A session, analysts inquired about the company's marketing efficiency and the impact of new product launches. RevolutionRace's leadership emphasized tactical marketing decisions and the success of the Ultra series in targeting existing customers.

Full transcript - RVRC Holding AB (RVRC) Q1 2026:

Conference Operator: Welcome to the RevolutionRace Q1 presentation. During the questions and answers session, participants are able to ask questions by dialing #KEY-5 on their telephone keypad. Now, I will hand the conference over to the CEO, Paul Fischbein, and CFO, Jesper Alm. Please go ahead.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Thank you, operator, and good morning, everyone, and welcome to this conference call where we will address the report for the first quarter of the fiscal year 2025-2026. Our financial year starts July 1 and ends June 30, so Q1 means the period July 1 to September 30. My name is Paul Fischbein, and I am the CEO of RevolutionRace. Joining me today for today's conference call, I have the company's CFO, Jesper Alm. Before we jump into any numbers, for those of you who are new to the RevolutionRace story, I will start by giving you a brief intro to the company. RevolutionRace is an international outdoor brand offering a wide range of outdoor products, mainly clothing, but also shoes, bags, and other outdoor-related products. Everything started with pants, and that product category is still the largest product category.

We operate with a D2C business model, meaning that we skip the middleman and sell our products directly to our customers. We do this mainly via our own website, but also through marketplaces such as Amazon. With our D2C business model, we can secure our competitive offering and at the same time maintain industry-leading margins. We are a digital-first company, but we have recently also taken our first steps into physical retail. In April, we opened our first outlet store outside Stockholm, in Sweden, and at the end of September, we also opened our brand store in central Stockholm. Historically, our brand was very much built with our community on social media platforms, and today we have more than 2 million followers and over 740,000 reviews on our site. RevolutionRace was founded in 2013 and launched in 2014, and we have been listed on Nasdaq Stockholm since 2021.

Our headquarters are located in Sweden, and we have approximately 130 employees. We move on, and this picture, I think, illustrates our international presence very well. We have customers in around 40 countries. We have 18 localized web shops and now also two physical stores, as I mentioned. We are fulfilling orders at two main logistics hubs with partners in Germany and Sweden, and with a smaller location also in the U.S. We design all our products in-house and work together with more than 25 suppliers for production in Asia. Now, let's take a look at our performance and net sales development. We started the financial year with a strong quarter. Net sales amounted to SEK 392 million. That corresponds to a sales growth of 15% in local currencies compared to the same quarter last year.

We believe that we are gaining market share in several markets as the overall market environment is described to remain challenging. The recent strengthening of the Swedish krona had a negative currency effect on our reported revenue since we report in Swedish krona, but the majority of our revenue is generated in other currencies. We deliver growth across all regions during the quarter. In the Nordics, sales growth increased by 19% in local currencies. In the DACH region, growth was 18%, and in the rest of the world region, 2%. Switzerland was the market with the strongest growth during the quarter, followed by Austria, and together with a growth of 14% in our largest market, Germany, this resulted in a solid overall performance in the important DACH region. In our most mature market, Sweden, we recorded growth of 18%.

In the rest of the world region, we are strengthening our position in several markets, including Poland and the UK. In the U.S., we saw a sales decline due to higher tariffs, which impacted or contributed to lower growth for the rest of the world region as a whole. Now, let's continue to look closer at the performance during the quarter, and we are also happy to report that we continue to deliver strong margins and remain one of the most profitable companies in our industry. Our numbers demonstrate our ability to combine growth with profitability despite an unfavorable currency impact from a stronger Swedish krona. This impacts both top line, as I mentioned, but also gross margin and EBIT. During the first quarter, EBIT amounted to SEK 75 million, corresponding to an EBIT margin of 19%, and the gross margin for the quarter was 69.6%.

We maintain a solid financial position with a net cash position of SEK 163 million at the end of the first quarter, and on top of that, also an undrawn credit facility. Ahead of the second quarter, we have carried out a planned inventory buildup, and we are now well prepared for the seasonally strongest period of the year. Inventory is more or less in line with last year, and we expect that inventory levels will gradually decrease over the course of the financial year. On an operational level, we have strengthened our management team with a new Chief Product Officer and a new Chief Technology Officer, and these additions strengthen both our product development and technological capabilities, which will support the next phase of our journey.

During the quarter, we continued our share repurchase program in line with the mandate from the annual general meeting, repurchasing shares for a total amount of SEK 32 million. Since the AGM in 2024, we have now repurchased shares amounting to SEK 168 million in total, and the board's proposal to the upcoming AGM in November is to cancel all repurchased shares. During the quarter, we have carried out several successful product launches. Our shell products sold well compared to last year. One could note that it was challenging selling shell products during the first quarter last year due to the late start of the fall, so good to bear in mind. Looking ahead, I also want to mention that we are excited to follow the launch of the new Ultra series, our most technically advanced collection to date, which was introduced now in early October, a few weeks ago.

The collection is using carefully selected materials designed to perform in tough conditions. With that news, I would like to hand over to the company's Chief Financial Officer, Jesper Alm, who will present and walk through the financial performance. With that, Jesper, please go ahead.

Jesper Alm, Chief Financial Officer, RevolutionRace: Thank you, Paul, and good morning, everyone. I will briefly cover the financial performance during the first quarter of the new financial year. Gross profit amounted to SEK 240.73 million for the quarter compared to SEK 245 million a year ago, and this equals a gross margin of 69.6% compared to the 70% flat last year. The slight decrease in gross margin is mainly attributable to currency effects on net sales and goods for resale. We note that the personnel expenses in absolute terms are slightly higher compared to the same quarter last year, while the number of full-time equivalents remained at just above 130. Personnel expenses as a share of net sales were basically in line with those of last year, the first quarter.

Other external expenses were SEK 169 million compared to SEK 158 million a year ago, and this as a share of net sales was approximately 43%, and that is lower than last year. EBIT, as Paul mentioned, EBIT and adjusted EBIT for the quarter amounted to SEK 75 million compared to SEK 57 million a year ago, and this translates to an EBIT margin of 19% compared to 16.3% last year. The non-favorable currency effect affecting reported revenue and the gross margin had a corresponding impact on the operating profit, and the primary contributor to the strong margin was good efficiency in marketing. Last 12 months, adjusted EBIT now is in excess of SEK 400 million.

The balance sheet remains stable with changes in line with seasonality. Net working capital decreased slightly to SEK 296 million compared to SEK 318 million a year ago, and changes in net working capital are primarily driven by slightly higher inventory levels and an increase in current liabilities. The inventory amounts to SEK 586 million, of which SEK 500 million was sellable or goods in warehouse compared to a total of SEK 447 million a year ago. Goods in transit has decreased from SEK 118 million last year to SEK 66 million at the end of the first quarter. Ahead of the second quarter, we completed the planned inventory buildup to prepare for the peak season that we're now entering into. Reminding that inventory levels are expected to decline gradually over the financial year.

Our financial position is strong, and we had a cash position of SEK 181 million at quarter end, or net cash of SEK 163 million when adjusting for lease liabilities. The credit facility of SEK 600 million remains available and undrawn. Cash flow from operating activities came in at SEK 27 million in Q1. In conclusion, we have a strong financial position and are well prepared for the upcoming dividend payment. Our aim is to distribute 46% of net profit annually, which is in accordance with the dividend policy. As a result of our continued growth and strong financial position, the board has proposed a dividend of SEK 1.35 per share, which represents a dividend growth of 13% compared to the SEK 1.20 paid out per share last year. The proposed dividend in total amounts to SEK 144 million, representing a payout ratio of 50%.

In addition to dividends being paid or proposed in this case as the AGM is coming up soon, during the quarter, we continued repurchasing shares in line with the AGM mandates of last year, acquiring shares for a total of SEK 32 million. Since the AGM in November 2024, we have repurchased 3.8 million shares out of the 109.6 million that we had outstanding a year ago for a total consideration of SEK 168 million. With that, it's over for me. Paul.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Thank you, Jesper. To sum up, the market environment is still described by many as challenging, but we are well positioned ahead of the peak season that we have in front of us. Our strong customer offering, our leading margins, and our high customer satisfaction give us a solid position when we now continue our journey. With autumn and winter approaching, we hope for a cold and snowy season that provides great opportunities for outdoor activities and experience also in nature. As I mentioned, we are now entering the most important season of the year. The second quarter has just started, and the real peak season lies ahead. Having said that, we can report continued sales growth at the beginning of the second quarter as well. That concludes our comments on the result.

Before we finish, I'd like to take this opportunity to thank everyone who has contributed to a strong start of the new financial year: our employees, customers, partners, and other stakeholders. With that, we are now happy to answer questions. Operator, do we have any questions?

Conference Operator: If you wish to ask a question, please dial #KEY-5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #KEY-6 on your telephone keypad. The next question comes from Emmanuel Jansen from Danske Bank. Please go ahead. The next question comes from Benjamin Wahlstedt from ABG Sundal Collier. Please go ahead.

Good morning. I hope you can hear me. A few questions from my end. First of all, continued growth, you say, in the report. Historically, continued growth without a magnitude has meant growth around 5%, if I'm not mistaken. I was wondering if you could elaborate or give some additional color on the magnitude of growth.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Hello, Benjamin. We are only a couple of weeks into the historically most important quarter. It has only been three weeks, and we know that the higher volumes, they lie sort of in front of us in November and in December. As always, we choose not to provide guidance for what we think about this quarter. What we say is that we have seen continued growth when we compare these first three weeks of October compared to the first three weeks of October last year, but we don't specify it more than that. We think it's not relevant since the higher volumes will rise ahead.

Fair enough. Another slightly different topic, FX. While I understand the translation impact on EBIT is negative in the quarter, could you say anything on the impact of the gross margin in Q1 from FX, please?

I think I'll hand over to Jesper.

Thank you for that one. We're still at the point where the weaker euro has had a bigger impact than the weaker USD. That goes for the first quarter. As we state in the report, we expect the benefits of the weaker USD to become more visible going forward.

Jesper Alm, Chief Financial Officer, RevolutionRace: Perfect. The reason I'm asking is your gross margin has been lower in Q1 versus the preceding Q4 in all but one case historically. If not driven by FX, what drove the Q1 Q2 improvement in the gross margin in this quarter? Is it just strong sales of shell products?

Paul Fischbein, Chief Executive Officer, RevolutionRace: Yeah, it is. I mean, gross margin is a combination of FX, product mix, market mix, and it's a combination of many, many components. Also, to some extent, the competitive landscape, we see that it is still challenging, so that has had an impact as well.

Jesper Alm, Chief Financial Officer, RevolutionRace: Right. I was wondering as well if you could say anything about any sort of changes made to the Alpine Collection in terms of order sizes, et cetera, compared to last year. I assume we should not expect 200% growth this year as well.

Paul Fischbein, Chief Executive Officer, RevolutionRace: No, but I mean, we launched our Alpine Collection or ski collection two seasons ago. That year, we had sales of, if I recall right, around SEK 30 million. Last year, last year's season, we saw sales within that category north of SEK 100 million. Of course, we expect growth to continue. We don't provide any, we don't disclose exactly how much we have bought for, but we definitely expect the good momentum within the Alpine category to continue to grow. To facilitate that, we have, of course, placed orders so that that can be realized.

Jesper Alm, Chief Financial Officer, RevolutionRace: Perfect. Thank you. I have two more. First of all, strong marketing efficiency in the quarter. What is the reason, and what can you say about that?

Paul Fischbein, Chief Executive Officer, RevolutionRace: That's a good question. It sort of boils down to hard work, a lot of focus, and a lot of tactical decisions and actions. Very well performed by the team. There is no sort of silver bullet or a magic hand that lies behind this. It more boils down to hard work, and we are happy to see the impact of that hard work also paying off.

Jesper Alm, Chief Financial Officer, RevolutionRace: Do you think they can repeat that hard work, so to speak?

Paul Fischbein, Chief Executive Officer, RevolutionRace: Our job is to sort of go to our office every day, more or less do the same thing, and try to improve everything we do on a daily basis. I think that is something that we have seen now, and hopefully, we will continue to do that. That is the plan.

Jesper Alm, Chief Financial Officer, RevolutionRace: It's not any sort of external actors such as Google pricing or anything like that.

Paul Fischbein, Chief Executive Officer, RevolutionRace: No, I understand.

Jesper Alm, Chief Financial Officer, RevolutionRace: Right.

Paul Fischbein, Chief Executive Officer, RevolutionRace: We have added some new colleagues to the team who have also brought in some new knowledge. That has also been an important contributor to the marketing efficiency that we now see. Extremely happy to see that, of course.

Jesper Alm, Chief Financial Officer, RevolutionRace: Perfect. Finally, for me then, you note that U.S. sales are slow due to tariffs. Could you remind us what the share of sales to the U.S. is approximately?

Paul Fischbein, Chief Executive Officer, RevolutionRace: Approximately, before the tariffs, it was at around 3% in total. Now that has declined heavily due to the new tariff situation that we have. We are not so exposed to that as a company in general, but that decline has an impact on the growth in the rest of the world region. I think that is also important to bear in mind. We're talking about three, four percentage points impact in that region. We saw growth in the rest of the world of 2% in local currencies in the quarter. If you exclude the U.S. development, you can add three, four percentage points to that growth in that region.

Jesper Alm, Chief Financial Officer, RevolutionRace: Yeah. Perfect. Sounds like a slow US is not really that big of an issue. That's all I had. Thank you very much.

Conference Operator: The next question comes from Andreas Lundberg from SEB. Please go ahead.

Thank you, Andreas Lundberg with SEB. If I start with market development, you talk about continued challenging. Why do you think you are growing so nicely despite all that? Also, why do you think you grow so nicely across the board if we exclude perhaps the U.S. market? Thank you.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Hi. I think it sort of boils down to what I just mentioned. We have improved our operational efficiency within marketing, but also, I think we have a very strong customer offering that has been strengthened over and over again. I think also bearing in mind that last year we had a more challenging situation. We had, for example, a decline of sales of shell products due to a bit warmer and hotter, a bit drier summer and late entry of the fall. I think that is something also to sort of note, which obviously impacts the comparison numbers.

Thank you. I'm back to the marketing question. I think you said last time that you were more cautious on putting on marketing given weak demand. How would you characterize that in the first quarter?

We report quite early in this quarter compared to the industry. We haven't really seen so much market data yet. I used to refer to reports such as Spot Index in Sweden, and we haven't seen any industry colleagues reporting yet. It's a bit hard to say. What we do see is that the Swedish market is a bit better, but on a high-level basis, I can't really see that, for example, Germany has improved in terms of consumer demand compared to a year ago. It seems to remain a bit challenging still in Germany.

Okay. Thank you. I was more looking into the marketing as such. I think you said you were cautious putting on marketing costs when the demand was so weak or weaker in recent quarters. Have you still been cautious on marketing in the rest of the world? I guess that's my question.

That's a very good question. Our policy is that we have a financial target that we want to aim. Our aim is to grow at 20%. We are not there yet, but at the same time, we want to maintain an EBIT margin of 20% as well on a full-year basis. This is the seasonally smallest quarter of the year. We report 19%. We want to balance growth and EBIT. To some point, that puts a limit on how much you could actually spend on marketing, for example, and other costs.

Sounds wise. Maybe one for Jesper. You talk about gradually lower inventory from here. Is that more seasonal effect, or is it anything else? Thank you.

Jesper Alm, Chief Financial Officer, RevolutionRace: No, we see a structural effect. We have obviously the seasonal pattern is roughly the same as every year, but we aim to structurally decrease the inventory as share of net sales throughout the year. As we've talked about the previous quarter, we were slightly high on inventory levels due to slightly lower sales growth in that period than expected. We have taken measures to reduce the inventory levels over time. We think we're in a good place, and we're going to improve that over the year. That's the plan.

Cool. Lastly, on your recent store opening in downtown Stockholm, what's the learnings? What do you take with you from the start? Thank you.

Paul Fischbein, Chief Executive Officer, RevolutionRace: It's a bit early to say too much. We haven't been open for a month yet, but we are satisfied with the start. We obviously can monitor the number of visitors and the interest it has generated. It's a bit early to draw any big conclusions, but we definitely feel that this is a very good strategic complement to the e-commerce business. We are evaluating opening up more stores. However, as you may know, we are a bit careful. We are very selective, and we do it with a step-by-step approach. Sales-wise, it's a very small share of our total sales, but strategically and brand-wise, we feel that this can really support our journey of building a brand.

Okay, thank you so much, guys.

Jesper Alm, Chief Financial Officer, RevolutionRace: Thank you.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Thank you.

Conference Operator: The next question comes from Emmanuel Jansen from Danske Bank. Please go ahead.

Hi, everyone. I hope you can hear me now. Sorry, I had some trouble with the technical equipment. I think a lot of the questions have already been answered at this point, but obviously, impressive growth in the quarter with Germany rebounding significantly. What would you say are the main drivers in this quarter in that region? Is it, as you mentioned, on the comparable base of shell products or new products or more stable market overall in Germany?

Paul Fischbein, Chief Executive Officer, RevolutionRace: Hi, Emmanuel. We can hear you now.

Great.

I think, as always, this boils down to a combination of a couple of components. I think, as I mentioned in conjunction with an earlier question, it boils down to better performance when it comes to acquiring customers and marketing. I think that we have been very well in terms of execution when it comes to, call it, campaign planning or merchandising on-site. I think there's also a component of weather. I try always to avoid speaking about weather, but in this first quarter, weather is more or less a component because we see higher sales when fall enters. Fall will always enter. It's more a question of when it enters. Last year, it came very late. This year, it came a bit earlier. Obviously, that has an impact on, for example, rain clothes or shell products.

I think a combination of some external factors such as that I just mentioned, but also internally improving the operational efficiency, especially within marketing. As always, I think we have a strong competitive offering. We develop new products. We have adjusted many details in our fleece assortment for it. Just to lift one example, we have launched new products. Continuously improving the customer proposition is also an important factor. No clear answer, more than a combination of many things.

This rhymes well with the Swedish market, right? Maybe a slightly more stable market here versus the DACH region and Germany.

I mean, we have seen that the Swedish market has bounced back over the last couple of quarters. In the last quarter, I think we had access to Spot Index. The report Spot Index is a report from the Swedish Trade Association reporting quarterly. We haven't seen any number from the calendar Q3 yet, but calendar Q2, it was reported that we saw growth for the first time after 13 quarters or something. That is definitely a sign that the market has bounced back slightly. The only data point I've really seen so far related to the calendar Q3 is some numbers from payment providers actually showing that the market continues to be slightly better in Sweden, but we can't really see that happening in Germany yet. Bear in mind, this is not the big amount of data points that I'm based on.

Okay. Great. Do you think that the 18% organic growth that we saw in Sweden, is that extraordinarily high, or given that this is considered as a relatively mature market for you, what should we expect going forward?

Good question. I think 18% is a good performance. Again, bear in mind that it's compared with a pretty weak quarter. We were disappointed when we stood here a year ago. That's also important to bear in mind. On top of that, no real questions on what to expect on the Swedish market. It's definitely an outperformance compared to the market in general. We are very comfortable to say that we are gaining market share in Sweden and in also many other markets, which is important, of course, and promising.

Okay. Great. Thank you very much. Looking into this current quarter, have you seen you stated that you still see growth. Can you maybe elaborate on if you see continued growth across all three regions in terms of organic growth still?

As I mentioned earlier, I think we should be a bit careful saying too much about the quarter we are in now. It's only been three full weeks, and it's the beginning of the quarter, and the big volumes are ahead of us. It's more or less the smallest weeks. We expect those weeks that we just have behind us, the smallest weeks in the quarter. We don't want to guide or disclose more than saying that we do see continued growth in the first weeks of October compared to the exact same dates last year.

Fair enough. On this new Ultra series, I know it just recently was launched, but have you seen any signs of good receivings yet? How will the rollout compare to the Alpine Collection be?

Interest has been very high. As you mentioned, it's only been, I think, 10 days, and the collection is very much sort of geared towards ski and Alpine. We are not really in that season yet, but sales have started in a good way, and we see a lot of interest. We obviously know how much we have bought, so you can more view this as a way of sort of lifting the status of the brand in general more than expect extreme volumes. Without disclosing too much, we don't expect Ultra series to be at the same levels as sort of the base Alpine assortment, the Atlas and the Axel products that we have, as is in our ordinary sort of Alpine Collection.

Great. Thank you very much. Can you maybe elaborate or give us some more color on what kind of customer you want to acquire from that type of product category?

Yeah. The idea is actually to target our existing customers more than, obviously, we always want to get new customers. We think that we have a very loyal customer base, and this is a way of offering products in a slightly more premium segment than we used to have. You can view this as a premium collection to our customer base. I mean, we have our concept of we used to speak about the unmatched value. The Ultra series, the aim of the Ultra series is to remain with an unmatched value. If you compare these new products and the functionalities and the technical specifications and the material, it should be a very competitive offering if you compare this with the competitive brands and competitive products. The idea is to target our existing customer base, but obviously, we also hope to attract some attention from new customers as well.

Really interesting. Maybe last question from my side, and perhaps something for the longer term here, can you provide any overview or development of your strategy and development in the Asia market? My impression is at least that you have brought in at least some expertise through personnel with knowledge of this region. Is that correct? Can you maybe provide us some updates on your thoughts about that region and markets?

Asia for us is today, when it comes to Asia, it's a part of the world where the production is taking place. We have a small sourcing partner in Vietnam that we're working with, but that's 100% focused on production and product development. We have, as you know, a year ago, we opened up the site in Japan and South Korea, but it's not the focus market for us.

Okay. Fair enough. Thank you very much, Paul, for all your answers. Thank you very much.

Thank you.

Conference Operator: The next question comes from Peter Hermanrud from First Partners Holding Five, yes please go ahead.

Hello. Congratulations. You see a continued sales growth in October, and Benjamin indicates that that has historically been more like 5%. I look at the heading of your quarterly report, and it says continued sales growth, and you had 15% in the third quarter. Should we maybe think that what you're saying for the start of this quarter is basically saying it's not a catastrophe? It could be just acceptable, or it could be great, but you don't really want to indicate anything more.

Paul Fischbein, Chief Executive Officer, RevolutionRace: I think you should not overinterpret it. I think you should, I mean, you should definitely believe that it's higher. The sales during the first three weeks this year are higher than the first three weeks in October last year. We choose not to disclose more than that at this point because it doesn't really matter how strong the performance is in these initial weeks. We expect much, much, much higher volumes in November and December. The peak lies in front of us, and we want to be a bit careful in disclosing more than we actually know and don't specify too much because we don't expect that to have a big impact. The impact will come later in the quarter.

Conference Operator: There are no more questions at this time. I hand the conference back to the speakers for any closing comments.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Thank you, operator, and thank you all for all the questions. Before we wrap up, let's see if we have received any questions online. I will look at Jesper and then ask him to maybe read a question if there are any.

Jesper Alm, Chief Financial Officer, RevolutionRace: Yes, we have received a couple of questions. One of them is partly answered already, but I'll read it out anyway. The new Ultra series seems to be priced in line with the established outdoor brands. Wasn't your strategy as a D2C company to be cheaper?

Paul Fischbein, Chief Executive Officer, RevolutionRace: Yes, that is our strategy. Our strategy is to maintain our unmatched value. If you compare this Ultra series, you can call that our premium line, with other brands' premium line, we see that we are, in many cases, at half the price level as many of the competing brands. There is no change in strategy. We have already, in the past, had two sort of segments in our range strategy. We've had our base assortment and the pro assortment, and now we have also launched a statement assortment, which is consisting of this Ultra series. You have to compare it with other brands' premium lines, and then we are at the competitive level.

Jesper Alm, Chief Financial Officer, RevolutionRace: Which leads into the next question. With several ranges across different price points, how are you planning to structure your offering in order not to confuse customers?

Paul Fischbein, Chief Executive Officer, RevolutionRace: I think it boils down to continue to be disciplined, offer quality products with our design element consisting of slightly more colorful products, tighter fit, and good price points compared to similar products in the market. I think that is important to bear in mind. We have not chosen to enter the cheapest segment in the market. I think it's always important to compare with products that are on par in terms of technical specifications, materials, and so on.

Jesper Alm, Chief Financial Officer, RevolutionRace: Those were the online questions received.

Paul Fischbein, Chief Executive Officer, RevolutionRace: Thank you. May I then say with that last comment, thank you all for joining us today in this call and for your interest in our journey. May I also remind you that the report for our second quarter will be announced on January 29, 2024. Hope to see you then. With that, thank you and goodbye.

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