Earnings call transcript: RTX Q3 2025 sees revenue rise, stock gains 2.35%

RTX reported its third-quarter earnings, showing a 10% quarter-on-quarter increase in revenue, driven by robust performance in its wireless secure communication technology segment. The company’s stock, currently trading at $160.66, has demonstrated impressive momentum with a 40.87% year-to-date return. According to InvestingPro data, RTX is trading near its 52-week high of $161.26, with current valuation metrics suggesting the stock is fairly valued based on InvestingPro’s Fair Value model. Key financial metrics included a significant improvement in EBITDA and a maintained gross margin above 50%.

Key Takeaways

• Revenue increased by 10% quarter-on-quarter.
• EBITDA improved to CHF 22 million from a loss last year.
• The company initiated a CHF 20 million share buyback program.
• Stock price increased by 2.35%, closing at $87.
• RTX is diversifying its supply chain away from China.

Company Performance

RTX demonstrated strong performance in Q3 2025, with a notable 10% increase in revenue compared to the previous quarter. The company’s focus on wireless secure communication technology and strategic partnerships with industry leaders like HP and Cisco have contributed to its robust growth. The ProAudio segment’s transition to a modular approach and ongoing investments in healthcare infrastructure have positioned RTX favorably in its markets.

Financial Highlights

• Revenue: CHF 60 million increase compared to last year.
• EBITDA: CHF 22 million, up from a loss of CHF 20 million last year.
• Gross Margin: Maintained above 50%.
• Net Liquidity: CHF 120 million.
• Component Inventory: Reduced by CHF 35 million.

Outlook & Guidance

RTX has set ambitious goals, including reaching CHF 1 billion in revenue, although no specific timeline was provided. The company expects a normalized fiscal year ahead, with a focus on expanding its healthcare and retail segments. The guidance for future earnings per share and revenue remains strong, with projections indicating growth in the coming quarters and years.

Executive Commentary

Henrik, CEO, emphasized the company’s expertise in "producing and developing wireless secure reliable communication," highlighting its competitive edge. CFO Milet Randluss noted, "Our business model works when we land at around 150 [million] a quarter," indicating confidence in the company’s financial strategy. Henrik also stated, "When we state an ambition, we also have a clear picture of what it takes," underscoring RTX’s commitment to achieving its goals.

Risks and Challenges

• Supply Chain Diversification: Moving production out of China poses logistical challenges.
• Market Saturation: The enterprise market remains relatively flat.
• Healthcare Expansion: Successful expansion beyond the Philips partnership is crucial.
• Cost Volatility: Simplifying production planning is essential to manage costs.
• Tariff Impacts: Diversification may lead to increased tariff exposure.

RTX’s Q3 2025 earnings call highlighted its strong financial performance and strategic initiatives, driving positive market reaction and setting a promising outlook for future growth.

Full transcript - RTX A/S (RTX) Q3 2025:

Paul Lisen, Moderator, Stadanske Bank: So it’s a quarter past ten, and my name is Paul Lisen. I’m the Stadanske Bank. I am happy to welcome Eric Bartmohsen, CEO of RTX, Milutra Luchs from CFO of RTX. And then we will start out by a presentation of the third quarter report, and then we will go to our Q and A afterwards which I will try to moderate.

Henrik, please. Thank you very much Paul and thank you for hosting us. Yeah, it’s Helene Graumonten, myself and

Milet Randluss, CFO, RTX: Yeah, Milet Randluss, CFO.

Henrik, CEO, RTX: Yeah, and we will walk you through the Q3 report. Presented a short agenda just to give you for those of you who maybe are new to RTX a flyover of what’s RTX and what do we do. Some key highlights and business updates. Then we’ve brought a short insight into one of our business areas, ProAudio, to give some a bit more insight in what we do in that segment. And then Millie will lead us through the financial highlights for Q3 and the first nine months of this fiscal year and of course outlook and then we hope that we’ll have some good Q and As at the end.

So let’s kick off. So RTX at RTX we are really experts in producing and developing wireless secure reliable communication. Communication fit for environments where standard communication doesn’t cut it, which could be up under the upper right, could be a firefighting team with a clear need to, you know, have efficient communication, being able to focus on the task at hand, fighting forest fires as in this picture without the luxury of mobile coverage or Wi Fi. This is where our technology makes a difference or in hospitals where vital and critical patient data needs to be wirelessly transferred from patient monitoring to the clinicians providing that technology, but also in on the lower lift in concert environments, making sure that the audience gets a clear high quality audio experience and enhancing the entertainment products or in a business environment that’s visualized in a warehouse where communication between employees benefits both the working environment but also the efficiency of the operations as such. So just to give you some insights where our technology makes a difference.

Then the setup here is one of the key assets of RTX is actually our customer base. We’ve selected a handful here, which all are global leaders in their segments having really strong brands, having a strong, you know, value both in the brand but also in the channel to market with the distribution setup and sales channels, which then we are leveraging actually to push our products with their brand globally. And that’s that’s one of the the the key elements of our business model. And then, of course, just to, you know open the box a bit more about you know these partnerships with these global brands which we you know most of them we’ve had for decades. It’s long term partnerships.

So for example, one of our customers, Vocovo, which is one of the market leaders in the retail segment in communication equipment for retail,

Paul Lisen, Moderator, Stadanske Bank: When

Henrik, CEO, RTX: we design a new headset to them, well it’s really a collaboration and this is what we did last year. We have the customers above the blue arrow and RTX below. So of course, before they are very close to the market, they understand the needs of the from the shop floor. We also have insights, but we very much bring also technology insights, what you know, what are the latest technology, what are the best technology to use in in different environments. Then we sit together, collaborate on product development.

They bring very much market and customer insight, end user insight, and, of course, also brand design. And we bring technology, so we do the development also integration in their back end systems during the testing. And then we allow Vopuku in this case to do branding, marketing, sales, distribution, while we take care of all the the tech technical aspects and the logistical aspects of onboarding, training, production, logistics around that. And then of course also making sure that the products fit for market throughout the lifecycle through a roadmap based product lifecycle management. So just to give you an insight and also an understanding that the partnerships that we have with our customers, global leaders in their segments is really a long term partnership.

So this you know this is a five to ten year cycle these product lifecycles. And then of course when we iterate this over time. So that was the quick flying of what is actually that we’re doing at RTX. So key highlights and business update. So first of all, looking at the report and the results for the first nine months of this fiscal year, you know, really have to see the trends both in revenue and I think also to really to focus also this time on the improvement in profitability.

We’re really happy about that. So we’ve seen solid growth in our revenue and also profitability, very much driven by which actually again the trends we’ve seen throughout the year, driven by strengths in enterprise and also healthcare progressing positively developing both on top line and on bottom line. Across the board, of course, very much in enterprise, we are seeing stabilized demands. It’s been a theme for the last handful of calls about the disconnect between the demand in the market and the demand and the customers’ orders to us. They’ve built inventory throughout the component prices, and we are seeing we’re very, very close to getting a stable demand, which, yeah, which, of course, is is also positive.

And we will get back on this. All this actually leads to that we in June, June 23, we raised our guidance on all three parameters. And now we are also getting into the final sprint towards end of the fiscal year. And we’ve been able to also to narrow our expectations on profitability. So we are targeting just around zero EBIT for the full year.

We are of course, know, even though, you know, we are seeing what we feel is a solid result from the first nine months, we are also seeing impact of a weaker U. S. Dollar. I think when we started this year, the US dollar to the Danish kroner was around seven, above seven and now it’s, you know, in the lower six. So I think it’s 6.4 something like that at the moment, right?

And you know when we ask Fortune Tellers in the banks, they say you know it’s most likely going perhaps even further down going into next year. So it’s something that we have to acknowledge that this is a challenge for us and we are seeing some impact of it in the results this year. Oh, sorry, in this quarter and yeah. But all in all, as solid result goes on revenue and profitability and happy happy with the trend that we’re seeing in in our business. So just walking through the the three segments.

So enterprise is this is where we do voice over IP telephone solutions, headset solution for for retail. So it it’s it’s products that’s depicted on on the left with handsets, infrastructure components like the and and headsets with customers like HP, Cisco, Vogtle, just to name a few, I can tell. A market that is relatively flat from an overall perspective, but we are seeing as mentioned earlier also, are seeing that we have growth opportunities in certain verticals like retail. And this is really you know we have a really strong position in this business. It’s around 75% of our business today and we have a strong position in the market where we also have the opportunity with our customers to attack these growth verticals.

So again, yeah, nine months revenue of just short of 300,000,000 compared to 02/28 same time last year, 31% growth primarily driven of course by retail, but also we are seeing the normalization in key customer demand patterns which has listed the revenue compared to last year. We are continuing to be building order book, so have a good confidence in that. But also we are you know, I think last time we also talked about you know having a new normal demand pattern. So the component prices also changed the operation for some of our major customers that are really keeping their stocks short up. So we are still working with the three to six month horizon and of course also in this business we are seeing impact of the dollar exchange rates.

But a strong positive development in this part of our business. For audio, this is the segment where the business model is slightly different, so both in healthcare and in enterprise we are doing full products. In Qualia, we have really gathered the the expertise and our know how and our capability to to develop secure, reliable communication and really embedded that into these modules that then which we allow our customers to build products on. And there are two main market segments addressed by this business. So one is what we call intercom which covers defense, first responders, firefighters, applications like that really intercom, the team communications equipment and the second which is we call mics and stage which is entertainment which is more about providing clear reliable sound in an entertainment setting.

And we have a handful of customers on that and so and this business model really allows us to address different market niches with a very standardized product in a that allows a different level of scalability in the RTX operations. So so and this is a transition that we started a couple of years ago and we are seeing we are moving in that direction. We’re also seeing as is the number is evident a drop in revenue compared to last year and there are two aspects to that. So we the nine months revenue is CHF56 million compared to CHF92 million last year. One thing is the move from full products which have a higher price point to modules that has a lower price point, but a more standardized delivery from RTX side.

That’s one thing. The second is that it has simply taken longer time to onboard new customers and existing customers on the new way of doing business or the new business model. That being said, we still have strong belief that we are able to grow this business again to a higher level both in Q4 but also moving into next year. We have, you know, the pipeline that we’re looking at is that we believe there’s a lot of good potential in that. Specifically, and I’ll do go a bit deeper on the defense and the first responder segment.

We are in good cooperation with a handful of customers in that segment and we are seeing a good potential and it is starting to move, but it also it is, you know, we are expecting limited short term impact on this because this business model takes a longer time than expected to really get into the results, but we have a strong belief on the long term that this is the right way to harvest this business or these markets addressing it by a standard product. Healthcare. So Healthcare is where we partners with Philips and supplying or taking ownership of the infrastructure that basically allows safe monitoring of critical patients. So this is a infrastructure communications infrastructure that really allows critical care patients to feel safe in them that they are monitored and they so they feel safe in their recovery. It allows clinicians to focus on core tasks rather than monitoring the patient itself.

So the value proposition for the hospital is actually freeing up clinical personnel which really fits very well into the overall market dynamics or market trends that you know we are seeing in aging population. Aging populations mean more complex care. In the same time we’re seeing a scarcity of clinicians and resources to provide that care. So solutions like this that we provide in VisPhillips is really tapping into that market dynamics. So this is what we provide there.

In Healthcare, we’ve seen again a positive trend in our revenue nine months at CHF52 million compared to CHF29 same time last year. Positive development. So we are building up. We are seeing revenue coming in on these infrastructure products that we are developing, and we are building our order book on these products. And I think the transition that we’ve also talked about where we’ve taken over full product ownership from the Philips and from the Philips product, taking over ownership is something that we are well working on.

It’s a long time transition to transition. It’s a broader product portfolio that we are bringing over product by product, but we are moving ahead on that. So that was the firewall of the different business areas and the highlights from that. So just a short dive into pull out during this segment you know on intercom critical communication covering first responders and defense. This is really so the setting here is a team that has a very critical task.

It can be first responders, police or firefighters that needs to address a critical situation, fire or anything else, where communication is key. Inter team communication and coordination within team is really key and they have a, you know, it’s a fast moving environment where you have to be able to focus on the task at hand and not on the technology that allows you to communicate. And the same thing in in technical teams in in in defense. And this is where the RTX value proposition on our technology really makes a difference. So our technology really is, you know, ensures reliability.

It’s rely it it’s ready to go. You don’t have to configure it. It just, you know, you can build it into your helmet or your headset, and and the and the team or the communication will configure itself and make sure that it adapts to to the team that that are are put together. And they it really allows them to to focus on the task. And this is and as some of you know, we are working with InVisio also to to support them with with our technology in their products.

This is some this is one of the cases that we are working with and developing. And we also, on a long term, see a potential that can help drive the RTX business. This is also a market and the dynamics in the market is that it takes time to build the credibility, it takes time to build the relations. So we don’t expect short term impact on this or medium term. It’s a long term impact.

But we really believe that this is an area for us where the technology from RTX really has a strong value proposition. So that was the the overall, yeah, highlights, and I’ll hand over to to Milk to walk through the financial highlights.

Milet Randluss, CFO, RTX: Thank you. Yeah. We’ve just selected a few key points on the on the financials. Now Hendrik has given a good frame for the numbers that I’m going to highlight. Here, we see the revenue development over the year.

And for the quarter, we see an increase of 10% quarter on quarter at constant currencies. And as Henrik mentioned before as well, the currency has kind of the U. S. Dollar currency has hit us in Q3. So in real numbers, we’ve got a growth of 3.5%.

Compared to last year, we have lifted the revenue by nearly CHF60 million. And this is really also something we’ve mentioned before that our business model works and we start earning money when we land at around 150 a quarter. So we are on the right trajectory. What we can also see in the development is that the distribution between quarters are becoming more equal. And Henrik mentioned the normalizing demand patterns.

And for everybody involved, both our customers, our partners who produce, a predictability in the quarter leads to lower costs. So that leads to better planning, it leads to better production, lower or fewer up and down cycles. So this is what we can see also in our gross margin, where we this year has maintained a profit margin across the quarters of around 50%, above 50% in accumulated. And this is both a reflection of a larger share healthcare where we’ve got higher margin than the average business. It is a reflection of the planning better planning, so that we’ve got lower indirect production costs.

And then it’s a reflection of focusing on the products and the customers, which are most beneficial for our gross margin. When we then look to EBITDA, we’ve got an EBITDA of CHF 22,000,000 compared to minus CHF 20,000,000 last year. So basically, from the CHF 60,000,000 increase in revenue, we see CHF 42,000,000 that hits the bottom line. And as you can see from the previous slide, a lot of it is on gross margin. And then of course, we have kept our capacity costs at reasonable level just with a small increase, trying to prioritize our capacity costs the best way possible.

We’ve got three other financial highlights that we share. The first one is inventory, and we share that basically to understand the history from where we are coming from. RTX as a business model, basically should not carry any or little component inventory. A few years ago, during the component crisis, we leveraged on our good relationship with large global customers, which enabled us to secure some components which was difficult for our production partners, and therefore we built up inventory in order to secure revenue. What we’ve done in the past couple of years is to then apply this inventory component inventory into production.

And what we can see compared to last year is that we’ve reduced this component inventory by 35,000,000 approximately 35,000,000, we expect this to go even further down, probably around $40,000,000 on component inventory. So we see the development in the right direction because of course we don’t want to end up with obsolete inventory and yeah, that’s going as planned. The next point that highlight is free cash flow. And I think for every business, flow is important and it reflects the health of the business, especially on operational results, and we can see that impacting and of course, the change in working capital also has an impact on this free cash flow. That leads to our net liquidity position, which is at the end of the quarter, 120,000,000.

And our capital policy states that we should have a solid cash solid liquidity position. It’s important because we’ve got, as mentioned before, large global customers. And these customers look to our balance sheet and say, are they robust enough to withstand some nasty weather? And everybody knows that if you need to get capital, it’s quite difficult. So therefore, we’ve set the level at CHF 80,000,000 to CHF 100,000,000 as guideline.

Reaching that CHF 120,000,000 this quarter, we have, of course, discussed with our Board and decided to launch a share buyback program of CHF 20,000,000 starting on Monday. We do that, of course, for the general objectives of a share buyback program enhancing the shareholder value. We decided to do it safe harbor because that kind of supports the liquidity in the share over a period of time, and eventually also increase the earnings per share. The timing of the programme is set to one year, but of course conducted it within the framework that the safe harbor permits. Leads to the outlook for the current financial year where we’ve got a bit more than a month to go.

In June, as Henrik stated, we adjusted our guidance upwards. And with this quarterly report, we have narrowed the guidance on our EBITDA and EBIT. And the reason we have done that is with this short visibility, we’ve got quite a clear view on our capacity costs, as always in our business. The timing of the orders between one and another month, so in September, start October, comes with uncertainty and therefore also of course the revenue and the gross margin leads to some, and therefore we haven’t adjusted the revenue gap or the revenue range. That concludes the financial numbers that we have decided to highlight.

Paul Lisen, Moderator, Stadanske Bank: Okay, thank you and then we will go to to q and a. So if anybody has a question, then just raise their hand, and then I will hand over the mic to you. So I’ll start. Henrik, just moving up level one. You’ve been there for six months now.

Yeah. I know that you have been around visiting clients, suppliers across the world in the period? Can you give us some of what where do you or is it too early to say where do you wanna hit the business? Is it continuing the strategy as it is, or is there any way where you want to change the business? You also this summer was out repeating that you still see the ambition of of the 1,000,000,000 in revenue without putting a time frame.

Yeah. Yeah. But

Henrik, CEO, RTX: Yeah. So so yeah. So some perspectives on that. So, yeah, I I spent some time and and, you know, continues doing so, spending time with our customers and our partners and of course also our own team in getting a deeper understanding of our strategy and our opportunities. So on in terms of where do I believe that we should take RTX, it’s I still I believe the core strategy, core business model that we really have core strength in secure reliable communication.

What I what I get feedback is there’s a need for that value proposition in many different segments both in enterprise which again yeah it’s the overall market is relatively flat but it’s also a steady market where we have a strong position. But there are growth opportunities and there is a need for our technology and our applications. The same thing goes in healthcare and as we go forward, I think also on a longer term there’s a bigger space for us for example in first responder type of applications. So the basic business model that we take our technology with our partners and bring it into attractive markets or markets where we have a strong position, I think that is a very valid strategy and business model. I think what where I think we shall develop and also be very even more sharp in in both in what we do, but also what we communicate as being more directly and closer to the market.

We should always be close to our customers, but we should also have a deeper understanding and get closer to our market So we can be even more proactive in where we place our so to say best both in terms of investments in technology, but also where we invest in market development and customer development. So so and and that that is basically what we are doing at the moment. So getting back to the billion, yes, you know, we we have an ambition to grow the company and we have an ambition that that we should grow. And at some point, we also should cross it a billion. What I’m trying to get to the, you know, getting a really strong understanding and and and and and and strong foundation to say is actually not only the ambition, but also how are we going to do it?

What are the steps? What are the markets that will drive us there? So right now we actually and and the next month we are investing in getting deeper understanding of the markets where we see growth like in retail, like

Paul Lisen, Moderator, Stadanske Bank: in

Henrik, CEO, RTX: healthcare, where we have opportunities at the moment. But I believe we need an even deeper understanding of what is the real potential and actually the most for me an even more important question what does it take to get there. And and and I think that is actually the core. So I’m I’m trying to also change the way we speak about this saying, yes, we should cross a billion, but that should be a result of what we do and be a result of our ambition and our understanding and close collaboration both to the customers, but also a deeper understanding of the market. So that’s what we are building at the moment and of course we’ll never stop doing that, but we are really focusing very much on getting to that point where we have this more solid understanding saying how are we going to do it and what is the position and what are the market potential that we are addressing.

So that’s the route I’m taking. Hope that was kind of some perspective on your questions. But getting closer to the market, does that mean that instead of just talking to HP or Alcatel Philips, you want to visit on a larger scale their clients to talk to the banks, the retailers, the hospitals and Exactly. Getting a better understanding what are the real world problems. It’s about those in terms of being able to get maybe better, know, prediction on what are the market dynamics that will affect our customers that then in fact will affect our business.

But it’s also about being a better partner to our customers because we can better proactively, you know, maybe with our insights and, you know, we are exposed to different markets so, you know, we can more proactively bring innovation to our customers that will make them succeed even more in the market and, you know, they succeed, we succeed. That’s the business model. So it’s getting into that and for us it’s also about where we direct our investments. Right now we are very much investing technology wise both in healthcare but actually also in enterprise and you can see that in the balance sheet on capitalized development costs. So this is where we’re putting our investments.

But I’m pushing ourselves to get an even better understanding of the market so we can kind of triangulate the input we get from the customer, our own technology understanding and market needs.

Paul Lisen, Moderator, Stadanske Bank: And that you are raising your capitalization and thereby doing the investments yourself, is that because you see an opportunity by interacting with the end clients or is it because you have agreed with your clients that now you have to come up with with a new product so that you have a more or a contract on hand that you have to come up with a product or module or whatever to deliver on, or are you investing in a showing that if we do this, then we can go to the clients and sell them to the list? It’s kind

Henrik, CEO, RTX: of a mix at the moment. And and, you know, we need to get deeper in into the to to getting a better understanding and and, you know, doing the market research before we make any at our own stage bets. So right now, so you could say in in enterprise, it’s very much based on our, you know, history. We understanding and and, you know, this is a strong business 75% of our revenue and we have a strong position. We want to have that position for many years.

So of course we need to reinvest in the platforms and you know so we’re also relevant in three or five years. So that’s what we’re doing on that. So that’s really investing in the core platform so we’re continually being able to develop products for our customers in enterprise. On healthcare it’s a bit different because based on the agreement that we have with Philips, we’re actually taking over product responsibility where we have to develop our own product roadmap and this is very much where we are investing. There you can say it’s a bit of a mix because of course we have Philips backing us with a sales channel, but it’s actually where we are investing in our own products that we can bring to the market.

But of course Philips you know, gives us some safety in in the in years to come.

Paul Lisen, Moderator, Stadanske Bank: If we go five, six years back, Achiex had a period where you announced a lot of frame agreements with existing and new clients. Then for the last four, five years, the communication was that there’s no need to go for new clients because you have huge opportunities by developing the framework agreements that have been signed earlier. Are you supporting the strategy of not being outbound and find new partners, or should we see that you now try to sign up more clients?

Henrik, CEO, RTX: I think that really depends on what the market section that we’re talking about. If we’re talking about enterprise, we, know, the the customer portfolio and the framework agreements that you’re talking about, we actually address the last portion of the market. And I think the development in that space, know, maybe taking retail aside is maybe even, you know, it’s expanding our interaction and our partnerships and our deliveries engagements with our existing customers. Whereas, to our view, and and health care is probably a different story. So, of course, in health care, our focus is very much to build the business with Philips, it’s a clear target that there we want to onboard new customers over time, bring our technology to them to broaden our market coverage.

So in healthcare, it’s a bit different market a bit different story than in enterprise and the business model in Qualio really entails us to get new clients, know, to bring our technology in terms of our modules to the relevant to markets with customers where our technology makes sense. So the answer is a bit different. And my answer will also be it depends on the business. It depends on the market.

Paul Lisen, Moderator, Stadanske Bank: We then move

Milet Randluss, CFO, RTX: Paul, we have a question from the audience. We have a question from Jens Hansen. Jens Hansen, go ahead.

Jens Hansen, Analyst: Yes, thank you. Thank you for taking my question here, and thank you Henrik and Miller. I have three questions for you, if that’s all right. Sure. The first one, it’s about your segments, and I would like to know a bit more how interrelated they are.

If you, for some reasons, decide not to proceed with the Pro Audio segment, what kind of impact would that have, if any significant, on the two other businesses? And also to your segment note with your EBITDA, how some if you could put some words about your allocation keys for your headquarter costs, etcetera? Is that based on revenue? Or how should we consider that?

Paul Lisen, Moderator, Stadanske Bank: You have

Milet Randluss, CFO, RTX: a question, I’ll take

Henrik, CEO, RTX: the second Could you have a third question you want to or if we take that afterwards?

Jens Hansen, Analyst: Yeah. We we might take that afterwards if if that’s alright.

Henrik, CEO, RTX: So so how interconnected are they? So, you know, what we are what we also have investment in and what we are really pushing in our technology is really to have a a joint platform because that, you know, the core in RTX is really the wireless communication and the technology. And there is, of course, a lot of, you know, it’s it’s the same technology elements that’s and and and we’re trying to build a stronger technology stack that we can use both as part of the enterprise that Huawei and also even health care that we are utilizing. So, you know, product wise, they are not that interconnected. But on the technology stack, we are we are utilizing many of the same components across the different segments.

But business wise, they are not that connected and interrelated. Yeah. Hopefully that answered some of it. And in terms of allocation, I think you could

Milet Randluss, CFO, RTX: Yeah. In terms of allocation, as you probably know, last year is the first year where we did this split on where we allocated all the costs to the three segments. And what we have done is that we have taken the costs that we can directly allocate to each of the segments, and I allocated those directly. And the remaining we have allocated on the expected revenue split. That also means that with us working more on the profitability on each of the segment, we will, of course, continuously work on more direct allocation of the costs to each segment, so in terms of their usability.

Jens Hansen, Analyst: Okay, thank you, Mila. The next question is about your health care business and that frame agreement with Philips from November 23. And with such frame agreements, normally, there are some uncertainties about volumes. So what I’m basically after is how you kind of work with that customer, and I’m after I mean, how sticky how sticky is that partnership?

Henrik, CEO, RTX: So on a on a sticky scale, so no. It’s it’s it’s it’s I would say we we have a good collaboration with with Philips and there are commitments in the frame agreement about order orders for a number of years really to support the transition of full ownership to us. So it is balanced actually the frame agreement, but of course the major potential for us is really to develop that both in terms of additional sales to fields, but also potentially to other customers in that market. But yeah, to put it frankly, the Philips system is based on this technology. So we’ve developed it with Philips.

We’ve taken over the ownership. So I would would say the stickiness is fairly good at least for a good horizon to support the transition of the products to us.

Jens Hansen, Analyst: Okay, thank you. And so one last thing, if that’s all right. So it’s more about I mean, something for you to consider. It’s about your guidance for the coming year. And I mean so since you are it seems that you are looking at your business for each of the segments, it would be very good if you could kind of also put some guidance on each of your segments and also how much you expect to capitalize for the costs.

But that’s just an input you can consider.

Paul Lisen, Moderator, Stadanske Bank: You. Noted.

Jens Hansen, Analyst: Okay. Thank you.

Paul Lisen, Moderator, Stadanske Bank: Yes. Just to follow-up on the Philips commitments. If you move back to the 1,000,000,000 stated in back in ’23, it was said that 20% or so or more of the 1,000,000,000 should be health care when you reach the 1,000,000,000. Is that when you talk about the commitments, is that covering that kind of level, or does that have to have on top revenue in form of the fields outperforming all new clients involved in and 20% of them at

Henrik, CEO, RTX: that time.

Milet Randluss, CFO, RTX: So that’s a 100,000,000. So

Henrik, CEO, RTX: I so the the Philips commitments doesn’t fully cover that level, but that’s actually what also we are doing. I’m a bit hesitant also because we right now, we are doing more deep in-depth work on both the market and the market potential so to to be more clear on, you know you know, because the the Philips agreement is a good way for us into this, but we have to, you know, build on top of that and that’s that is our ambition. So so so the actual split and the actual ambition is something that we are diving deeper into and and hopefully we can be more, you know, more factual and more direct on on that at a later point. But the 200,000,000 is a good part of that is covered by the commitments but not fully.

Paul Lisen, Moderator, Stadanske Bank: And coming back to the question about the ProAudio profitability, it’s quite heavily loss making right now. But if I do assume that the cost base you have for headquarter cost, central cost last year and do a revenue share contribution into to ProAuto now, then ProAuto should be operating in itself about breakeven on EBITDA level, meaning that revenue shall not increase much before it’s contributing positive to the group overhead. Is that correct?

Milet Randluss, CFO, RTX: That’s correct. And I think what Henrik said before as well, this year is also quite impacted by not much full product revenue. Still support on the full product, where now what we see going forward is that we’ve got module business where there’s considerably fewer internal resources bound to that because you can use the same resources for for all the clients. So yes. You’re right.

Paul Lisen, Moderator, Stadanske Bank: If we do go to enterprise and and the current market, not necessarily sell out, there are your insight into to future revenue. You say you have a very strong order book for now. A quarter ago, you said that one client or a client had normalized and some hadn’t. Now you talk about more of the larger clients having normalized. If you take it on a group level, how much of the revenue within the enterprise is back to normal and how much is still reducing inventory?

Or do you expect normalization from the next financial year across the line?

Henrik, CEO, RTX: I think going into next year we are going to expect that it’s a fully normalized fiscal year. I think that that’s what we are looking at.

Milet Randluss, CFO, RTX: And if I may supplement, the normalisation. We are going to a new normalisation, so we still have the same more or less, same top at least the same top eight customers. Their ranking in the top eight is different. So when we talk about normalisation, we also talk about that the predictability for what they expect for the next six to nine months, when we know that, they are starting to hit that. So we are starting to see a more even flow and that’s a new norming.

So we’re not going back to the same, but we see a predictability, we see a steady flow, we see it on some of them at both growth trajectory.

Paul Lisen, Moderator, Stadanske Bank: And my guess is that the Coho has become one of the larger clients, least for now, the growth that they have. Just to have an indication about how the potential is of that client. Can you say something about when they sell a solution, are they selling it on our house and legal are using it? Are they selling it on a regional or by shop or by country, or is it a global agreement that they do?

Henrik, CEO, RTX: It I think the normal for them is by group, maybe by country. So they as you saw, they just onboarded Spa.

Paul Lisen, Moderator, Stadanske Bank: Yeah. But Spa Denmark. Okay. Yeah. So it’s just time and pressure.

Henrik, CEO, RTX: So I think that’s that’s my understanding. That’s their normal way of onboarding new customers. Typically in kind of Tenderlite setup. So it is, you know, yeah, a bit, you know of course, their their predictions and their business is also dependent on, you know, do they win deal or do they not. So it is project sales from their perspective also.

It yeah. By country, by group, that’s I think that’s the norm.

Paul Lisen, Moderator, Stadanske Bank: And then pro author, as I understood you you earlier, then you expect that we are right now at a revenue trust, meaning that we are heading for growth next year.

Henrik, CEO, RTX: That is definitely our, you know, both our ambition and also our intention is is really to see this this is we should see the the the business picking up from here. And as just, you know, the math that you did is also pointing at this we’re trying to hit a scalable business model that doesn’t pull as much on shared resources because we are selling as shared products. So we should also see profitability picking up in that business. Does that mean it’s because that

Paul Lisen, Moderator, Stadanske Bank: those who are having a full product are in the same level as the enterprise that they are completed the the inventory normalization, or is it because that the main part of the business now is modules?

Milet Randluss, CFO, RTX: The last thing, the main part part of the business is module.

Paul Lisen, Moderator, Stadanske Bank: Yeah. So you are almost completed the the exit of the full product part of the business.

Henrik, CEO, RTX: Yeah. And I think, you know, just to add, I think, positive story also to that, we we’ve actually seen with a number of these customers, you know, you when you change the business model, you risk losing customers. Right? We actually been able to keep the customers and change the business model within and then, you know, change our partnership. And I think that’s actually a very strong point that we’ve been able to do.

Okay. So now focus is building up the client portfolio in that segment. Right? And

Paul Lisen, Moderator, Stadanske Bank: then to the interesting part, the health care because that’s where the where the margins are right now. If I looked at the future q two and they say now just to make some quote, demand for hospital patient monitor is remaining strong. Significant partnerships have been signed in The US recently and see solid demand currently. Can you say something about the transmission from them winning contracts at a hospital group in The US? How is that being seen in your business?

Is there delay before they when they sign, then they have to build the infrastructure, the software, and so on. Is there a three month, six month, five month delay before they when from when they ramp up and until you get the revenue, or are you just delivering on par with these fixed contracts?

Henrik, CEO, RTX: What what Philips, I think, normally communicate, that’s also what we’re seeing. When they, you know, win a new contract with a new hospital and they do an installation, basically, you know, commissioning of of installation. They are typically depending on the size of the hospital and the you know, it takes between nine to eighteen months for full implementation. That’s what they are they are looking at there. You know?

Typically, the onboarding goes that the hospital goes to you know, they do a pilot. They implement it in one ward, then they see everything worse. It gets approval, then they do a full rollout and, you know, and the installation takes time. So so it is it is kind of you know, there is a delay depending on the size of the installation.

Paul Lisen, Moderator, Stadanske Bank: So And and the sales you have right now, are there any sales from the former generation, or is there out of the books from now

Milet Randluss, CFO, RTX: it’s the new generation product? We still have some of the old generation. Yeah.

Paul Lisen, Moderator, Stadanske Bank: But there’s a material of the 22,000,000 in the quarter?

Milet Randluss, CFO, RTX: No. Not in the quarter. No.

Henrik, CEO, RTX: So from

Paul Lisen, Moderator, Stadanske Bank: q three, q four, and into next year, then it’s the new generation?

Milet Randluss, CFO, RTX: Yeah. I think by end of q two, we are basically all on the new generation. And, of course, the new generation is with products where you continuously update software and features. There’s going to be a continuous kind of new versions. But but there we should have the transition basically more or less complete on the main ones.

Paul Lisen, Moderator, Stadanske Bank: And then about the opportunity to sell into two new clients like Siemens or GE or whoever. Are you starting to approach those or are you having your hands full with Philips just to make certain that that works?

Henrik, CEO, RTX: Of course, we do have our hands full, but that being said, had initial reach out but it’s something that we need as part of, you know, both what we’re doing, revisiting our market understanding, the strategy. This is something I’m quite sure that will be an integral part of of that plan that we need to strengthen because that takes time as well. Mhmm. Yeah. That’s why I always say.

There’s a there’s a lead time on that. Right?

Paul Lisen, Moderator, Stadanske Bank: Yeah. Yeah. What would let’s assume you sign one new client. What’s the lead time before you have the specifications, and can they start shipping products? I

Henrik, CEO, RTX: probably can’t give you a valid answer on that.

Paul Lisen, Moderator, Stadanske Bank: Oh, one year, two year.

Milet Randluss, CFO, RTX: I think I

Paul Lisen, Moderator, Stadanske Bank: guess it’s a long It

Henrik, CEO, RTX: I courses. I would also expect, yes, but but it’s something that that we need to get deeper into to actually provide a valid response to.

Paul Lisen, Moderator, Stadanske Bank: Then one of the results of the tariffs and changes was that you wanted to diversify your sourcing. Can you give an update on how your sourcing or procurement situation is today, and if it has any impact on future financials? So

Henrik, CEO, RTX: So I think for years, you know, we’ve you know, we we have the original setup that, you know, we are we have a good partnerships with equipment manufacturers and both in Europe and Denmark, but also in Asia of course with a major part in China. And for years we’ve had a China plus one strategy and now we are moving, you know, accelerating accelerating that. So so our supply chain is is currently, you know, moving production out. The way is that we have to go hand in hand with our customers. So it’s a close collaboration between us and our customers and our partners.

The partnerships that we have with the EMS manufacturers are they are global players so we can actually move within the same manufacturer. Can we move out of China for example to The Philippines which is one of the areas where we have a majority of footprint in that. So I would say it’s an acceleration but it’s very in hand with our customers, you know. In this and staying on tariffs, think as you mentioned as well, you know, in our contracts, it’s the tariffs is handled by our customers. So of course they do also have a very close say in in where we actually put that footprint.

You know, I think the strengths for us is we have the flexibility and agility to do it, and we are doing it at the moment, and trend is definitely moving out of China. You know, when you get into details, it’s it gets more blurry talking about moving out of China. So things, you know, because you can move tier one out of China, but you still have some raw materials and so on. And we are definitely also working with our suppliers moving tier two, three, and so on out of China. But again, you know, reflecting on that, you know, twelve months ago we talked about no tariffs and now we are happy it’s, you know, Europe got 15.

And so so the tariffs is is a new thing, of course, we we have adapt to. But I think we will be impacted, I’m quite sure, in terms of, I think, pressure on prices for sure. But I think we’re actually in an okay position to manage with the agility we have with our with our suppliers. Okay.

Paul Lisen, Moderator, Stadanske Bank: The outlook full year, you have this 30,000,000 range on revenue. There’s a range on earnings as well. You have three months at least visibility. There’s one month left. What can take you that you went down at the $5.20 and not the $5.50?

So is that simply the customers to decide if they want the products in late September or October 1?

Milet Randluss, CFO, RTX: That’s one part. And then there’s also our production partners. Some of the components, of course, being shipped in so that it can be produced by the end of and there is an uncertainty on some of the component like there always is. So they are the two main parts.

Paul Lisen, Moderator, Stadanske Bank: That means you have it’s not like parts for you to look at if you will.

Milet Randluss, CFO, RTX: You know, internally, of course, we’ve got a smaller range than five thirty to But but, of course yeah.

Paul Lisen, Moderator, Stadanske Bank: I can also see that you have start hiring again. You make a cost reduction exercise earlier in the year, but now you are six percent more people than you were a year ago. Is that because you got to a point that now you reinvest because you are more confident about the future? Or

Milet Randluss, CFO, RTX: Well, not not really because the majority of this increase is because we’ve insourced resources on tests. So we have created yeah. We’ve got 25 people that we have had with an outsourcing partner for many years. And in order to ensure that these key resources stay with RTX, with the know how they have, we decided reduce the risk and then insource these. So that’s the 25.

So apart from that, we are more or less flat, but of course you can say something about looking forward.

Henrik, CEO, RTX: Yeah, think looking forward, so I think, you know, we are trying, you know, really we are investing in spending time understanding the market opportunities that we have to drive growth and have a strong growth ambition also for RTX going forward on the midterm, very much founded on on retail and on health care. When we do that, you know, when we set that ambition, think at least for me and maybe also looking at the RTX history, it’s very important for me that we have a solid plan. And of course, when we set high ambitions, we also need to say what does that, you know, what does that entail for our organization? What does that mean? What do we need to do more of?

Is there anything we need to do less of? We so so that will be part of of that. And definitely I’m expecting that we need to, you know, bring in competencies in healthcare because otherwise we won’t succeed with that opportunity over time. So but again for me it’s very important that, you know, when we state an ambition, we also have a clear picture of what does it take to do it and that of course involves organization as well and people, you know. It’s people that creates results.

Paul Lisen, Moderator, Stadanske Bank: Yeah. Okay. So The hour is gone. I can’t see questions out there. Anna, are there any?

Milet Randluss, CFO, RTX: No. No questions from the audience.

Paul Lisen, Moderator, Stadanske Bank: Okay. Alright. Well, then thank you everybody for joining, and have a good day.

Henrik, CEO, RTX: Yeah. Thank you. Have a great day.

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