Earnings call transcript: Shelly’s Q1 2025 revenue surpasses guidance

Shelly Group AD reported a strong first quarter for 2025, with revenue reaching €26.5 million, surpassing its guidance of 25% growth by achieving a 29% increase. The company’s EBIT rose by 23% to €6.7 million, contributing to an EBIT margin of 25.2%. With a market capitalization of $3.28 billion and an impressive gross profit margin of 100%, according to InvestingPro data, the company demonstrates robust operational efficiency. Despite these positive financial results, the company’s stock price remained unchanged at €37, indicating a neutral market reaction.

Key Takeaways

• Shelly’s Q1 revenue growth exceeded expectations, reaching 29%.
• The company’s EBIT margin stood at 25.2%, reflecting healthy profitability.
• Stock price remained stable despite strong financial performance.
• Shelly confirmed its revenue guidance for 2025 and 2026.
• Expansion into new product categories and regions is underway.

Company Performance

Shelly Group AD demonstrated robust growth in the first quarter of 2025, with significant revenue increases across all regions. The DACH region grew by 19%, the rest of Europe by 41%, and the rest of the world by 34%. This widespread growth highlights Shelly’s expanding footprint in the smart home and building markets.

Financial Highlights

• Q1 Revenue: €26.5 million, up 29% year-over-year
• Q1 EBIT: €6.7 million, up 23% year-over-year
• EBIT Margin: 25.2%
• Cash position improved by 11.9%
• Secured a bank line of up to €20 million

Outlook & Guidance

Shelly confirmed its 2025 revenue guidance of €145-155 million and expects to achieve €200 million or more in 2026. The company anticipates continued growth at 2-3 times the market rate, driven by new product launches and regional expansion.

Executive Commentary

Logan, a company executive, emphasized Shelly’s position in the market, stating, "We are still a small player in that market. The smart home, smart building market is big, and we are growing nice." This reflects the company’s confidence in its growth trajectory despite being a smaller player in a competitive market.

Risks and Challenges

• Potential supply chain disruptions could impact product availability.
• Market competition remains intense, particularly from top-tier competitors.
• Economic uncertainties could affect consumer spending in the smart home sector.
• Regulatory changes in key markets might pose compliance challenges.
• Currency fluctuations could impact international revenue.

Shelly’s strategic focus on innovation, regional expansion, and maintaining competitive pricing continues to drive its growth in the smart home and building markets. With a beta of 1.09, the stock shows moderate market correlation, while analysts on InvestingPro anticipate continued sales growth. Despite the stable stock price, the company’s performance and future prospects remain strong, supported by impressive margins and healthy financial metrics.

Full transcript - Shelly Group AD (SLYG) Q1 2025:

Logan, Executive/Presenter, Shelly: much. Good morning from our side as well, and thank you for joining our Q1 earnings call. And as usual, we have a couple of good news. The typical agenda, so I will start with some highlights.

Dimitar will lead through the product session, a little bit different this time with some more information than you had before. And then I will come back with financial details, and then at the very end, we are open for questions, of course. This is a typical reminder what we are doing for those who are new to our call. We are a smart home company, a smart connectivity, smart building, energy optimization, however you wanna call it. Whatever happens in your home is is done by us with our help.

And you will see during the presentation that it is this is taking different levels. Some highlights. We have sold since the start of Shelley that was in 02/2018, now more than 23,000,000 devices. In the last twelve months, we have sold more than 9,000,000 devices. We are in more than 4,500,000 households and we added 1,500,000 households in the last twelve months.

If I say households, let’s let’s maybe better call this installations because there are some industrial installations as well. And we have, by the March, we have more than 2,000,000 cloud users and we added 700,000 more than 700,000 in the last twelve months. That’s all quite impressive numbers. Some other highlights, our revenue and our EBIT is above budget and above the guidance. You remember that in the last call we said we expect a growth rate of 25%.

We were a bit above. We are growing in all markets above the average of the market. It’s always complicated to get exact numbers because market research data is not available. But if we talk to competitors, if we make our own estimation, some regions are suffering. We are everywhere above the market.

We have increased significantly our premium user app number. You will see that at the end. We have successfully enlarged distribution channels in DIY and as well in Pro in all of our countries and regions. We have a significant growth of addressable customer ownership coming, of course, with the cloud users where we have contact data and most of them we are allowed to contact and we are contacting them with with data every day if you want. And we have sold the first units of our new smart lock product line with a very good success.

It was only a small number of pieces like 1,000, but they were sold out in no time. And we started one year ago our installer network and we have now more than 1,200 participants in in less than one year. That’s as well quite nice. So that’s just a picture with a lot of logos on this just to show you who joined as a distributor in at retailer in DIY and in professional in 2024 and in 2025. For ’25, this is signed contracts or close to to signing contracts.

So we are continuing to add more retailers in in regions, especially as well outside of of the DACH region where we are already strong in Nordics, in Southern Europe, and we have a quite high demand on this side as well. That’s very promising for the future. It always takes a little bit of ramp up time to see real big numbers, but that’s quite positive. On our installer network side or installer program side, I said already at the beginning, we started at the Leiden Building in March 2024 with zero installers on our website. Now we have 1,200.

Officially, the program is live in the DACH region and The Nordics, but you see that it’s already spreading around and we have a couple of hundreds in the waiting line. So it will be significantly more over the next quarters. And we have agreed on starting phase two. Phase two means we will localize that. We will have the trainings in local language.

We will do this with an automized program where as well the installers at the end will have to run a small questionnaire, a small test. And we see that that having this in local language as we did in in Denmark and in other Nordic regions really helps to increase because most of the installers are not very good in English. But the demand line, the queue is already very long for that. We have just we had last week, so that’s not from first quarter, but last week we had Interzola in Munich, the biggest or one of the biggest European trade shows for solar business. We already knew that the companies you see here with the logos that they use Shelley devices, that they have integrated Shelley devices in their solutions.

That’s very good. What we saw at InterSolar is that almost every company in the solar business offers, of course, their own energy management system or Shelley. So at at 30 or 40 of the booths of of solar producers, you saw the typical sign, we have our Huawei energy management system or you use Shelley. And our devices were as well displayed at 30 or 40 other booths than than our own. Very positive feedback as well from the installers.

All of them, really all of them said, we have a very good product, very good to integrate it, and we are far beyond the past in 02/1819 where we were considered as a do it yourself brand with a couple of small hiccups maybe that that geeks like, but the professionals not. We are way beyond that step and that is a super positive feedback and opens a lot of roads and doors into the next future. And if we consider solar business as one of the verticals, because that’s a very specialized business and an entrance door for us in the home automation, And we are now talking, especially in the DACH region, to to other companies. So companies that produce motors for garage doors, for shading systems, for roller shutters. Of course, you can always include a Shelley afterwards, but if this is compatible from the very beginning, that opens new markets and increases the number of households and users.

We are talking to the first insurance companies. They could possibly use our flood to detect water leakage to avoid big damages, smoke detectors, water valves, or other products and include this in their insurances. There are businesses like this in some countries in Europe. We have first contacts not only here in Bulgaria, but as well in Germany to some of the insurance companies. That will take time.

It’s nothing that will happen from one day to another, but it’s more things that will pay back in ’26 and in ’27. And on the security side, we are in certification process. Some of the processes are already finished with the worldwide big companies like Alarm.com, Resideo, Ring, ADT and a couple of others. They are offering typically the the high end security systems with professional support and they are all trying to to get as well a position in the in the smart home business because if the installers there and installing the alarm systems, he could as well install relays and roller shutter steering and other devices. That is potentially another vertical and we have much more different verticals in our mind that we will address in the next years.

But one thing after the other, it’s as well a question of resources. In January, as in every January or February, we ran our customer survey. So we asked Shelley customers about what they like about the products, what they use the products for, what is an the advantage of Shelley from their point of view, would they recommend Shelley devices to their friends and and partners. And in this year, we had a record number of participants, 52,233 34 to be exact. That is amazing.

If you if you have some information about market research, usually, have numbers like 1,000, two thousand, three thousand people that you asked. So we asked more of course, but 52,000 participated. So that’s very very reliable numbers. I would just want to point out two important things. We have an NPS score.

So if you ask the people, are you will you recommend Shelley system and Shelley devices to your friends? The NPS score is 55 and went up five points versus last year. That is very good. We think that we can still increase that and we will increase that over the years, but that is a very good basis. The second thing is our application.

The Shelley app last year was rated let let’s say okay ish and we grew within twelve months only 21 points in NPS to 23. That is still not breathtaking, but compared to to competitors in the market, we are well positioned. And if you make a double check with the app stores of Google and of Apple, you see that our rating now is above four stars, whereas it was 1.8 or so a year ago, and it’s well above most of our competitors. On top of this, very very important information, 20% of our customers are considering a premium upgrade and that’s something that leads to recurring revenues and software as a service as services and that’s quite promising as well. Now we all know from asking a customer, are you willing or are you considering to move to a paid service and then actually to move them, that’s a very long way Usually you lose 50% or more of them on that way, but 20% or even if it would be 10% or 5%, that’s a very very impressive number and looks quite promising for the future.

Now to the hard facts. We grew in the first quarter ’20 ’9 percent of revenue to 26,500,000.0. That is above the guidance because we said we want to grow 25%. That is as well above all our internal targets and that’s quite positive. We think this is a good and solid basis for the next quarters, but we see this as well as a reserve because we will not know in the in the current circumstances in the market how the next quarters will deliver, but we will come back to this at the end.

Our EBIT grew as well 23% to 6,700,000.0. We have an EBIT margin in Q one of 25.2% And this for me was as well a very positive development because with only growing 25 or 29, so that’s below the planned average for this year. And we expected that the EBIT will be a little bit lower, so as well this is very promising that EBIT margin is above 25%. And we improved as well our cash position versus one year ago and you will see as well versus end of the year in in the later chart by 11.9%. And so the first steps that we took to improve our working capital show the first results.

We are at the very beginning with that. But we have as well secured with a with a bank an overdraft that we can use if needed. Currently, don’t need it of up to 20,000,000 at very good conditions. And as you know, a bank line is only paid or a very small proportion is paid to to have it available and only more is only paid if we actually need it. So we hope that we don’t need it or we don’t need much from that, But that gives us a lot of security for the coming months and years because if cash is a limit for growth, we will have the possibility to take some of this money.

So all promising and now we have some information about products from Dimitar.

Dimitar, Product Lead/Presenter, Shelly: Hello. Good morning. Nice to see you there. Let’s talk about the products and what happens in the q one and what is the next. The first one, what we’re gonna show, this is the new products updates for for ’25.

We have a five product updates, which is coming this year and seven completely new products. And just for for three months, I think we completely following the the the same pattern as a year ago. And now we’re still planning, and this is the in the pipeline is 40 to 60 new products. It depends. Some are probably a little bit complicated.

Some of the products need more, let’s say, long term certification process. But anyhow, we’re completely positive that we’ll be we we can reach the around 50 products to enter the in the air. At the same time, we start discounting the old products, the very old product. This is the gen one products, partially gen two products on the market. It’s mainly is coming the newest new releases and new products and new updates, which we make a year ago.

As you see, this is the the the our target for ’25. Then during the q one, we already released our products as a double screen dimmers. Our DALI controller is available on the market and everything which we promised a few months ago. In the q two, which is already on ongoing, you you can see that we already our our first our generation four of our devices, which is amazing. By the way, everybody is excited because nobody until now make devices working in the all kind of the most important protocols, mean the Wi Fi Bluetooth, ZigBee, Matter, building into the same device, and the customers can choose what kind of technology for connectivity technology to use and what kind of the protocol.

And not only the Shelli one l and two l for first time worldwide, there is a the double relay power using the Wi Fi network doesn’t need any kind of the hub with motor enabled. It’s it’s it’s something which which we released on the market last month. And this is this we expected to drive our revenue and our users much better. And then the q three is coming where we we see that if the q three is the mostly update the gen four devices and do it yourself products, then on the q three, where we’ll be focusing on the plug and play products for the customers. And as you see in the picture, there is a power strip.

There also will be power strip with USB charger. There will be very special presence. Sensor will be very fancy features. And with in q three, we will be preparing and targeting we will be preparing to targeting the customers for the Black Friday and for the for the last quarter where where most customers and customers which are not so tech savvy, will start looking for the smart products. And the q four is still in line where we’re planning our new lock system, where we’re looking for the first camera to be released on the market.

And by the way, there is a very good exciting news about the cameras because development is going very well, and we have a very strong partner which help us to bring the camera in really professional and and very high quality level. Something also which is interesting. Many people ask us what between the generation. How the people switching between the generation, how the revenues relate to this generation. We can show here that in the last four years, we have four different generation of the devices.

And you can see that 2022, our main results is coming from generation one, which is ’23. The our revenue start coming from the from the generation two of the devices. And a year ago, we are we still have a little bit more from generation one, mostly generation two, but then the generation three is on the is on the way. And this year, everything is repeating, which mean that margins is related with the new new generation, with the new products which we develop, with our new products we can reach because this is not the same clients which they switching between the between the generations. Still, the clients using the the the gen one of the devices, our first client.

But this means that our new products, we is able to reach the new people, new customers, new markets because we make our products widely compatible and much more functional than than four or six years ago when we start with this one. And now we prepare a little bit product comparison to see because there is many question. Why Shelly? There is many other brands. Why Shelly?

And the first one, something which are number one worldwide. This is the smallest mini relays, which for the most of the people, you know, one of the our most important market is the retrofit market, where the people doesn’t need to change anything in their electrical installation, but they wanna make it their houses and buildings smarter. And then the size is matter. Smaller size, they can do more. They can fit everywhere.

And as you see here, the closest competitor to us, which is the son of of size closest competitors. As you’ve seen, our size is is smaller than their one. They’re really smaller than their one in the most of the dimensions. It’s most important is fit. And, also, the the Sonoff one is something which is not the Wi Fi operated.

Our one, the one which you see the gen four, is Wi Fi, Bluetooth, ZigBee, and everything with power measurement and everything building the relay meet meet much more functionality in in the smaller form factor. And there is a a benchmark for the mini relays. We compare three three products, but not only by the features. As you’ve seen, there is a so we still with the Gen four, support the cost Wi Fi six on the top of everything, the the the the most wide using the the technology for connectivity right now in the in the customer homes. But also when we walk about the features, you can see how many how rich of the features is our device compared with the with with others.

It’s not only this one. We’re also comparing the post series with our competitors. And from what you can see, there is a lots of brands there. And the only one which is comparable to our our size is Bosch, which is, by the way, is maybe three, four times expensive than us. And still not and still, for us, this is the dummy relay, which need controller, which need the hook, which cannot decide which cannot take up a decision by itself.

I mean, it cannot be programmed at us, our devices, with every which we build in. And this is a simple comparison between us and every almost every other similar similar area on the market. As you’ve seen, there is a cheaper devices, not so much. A single one. We are in the we’re on the middle of the price range.

But at the same time, if you compare the features which we’re providing, compare with everything, everyone else, it’s we are far away from our competition. And we’re still working to make these differences much a lot much a lot of differences to add some some more features and to go far ahead from our competitors also in the next in next months, years. And now back to Logan. Yeah. A little financial details.

Logan, Executive/Presenter, Shelly: Yeah. Just just one more remark to the pricing and the price comparison. If you go two years back, you saw and you can check-in the old presentations, we always had a pyramid saying that our prices are twice as high as the prices of cheap Chinese competitors like Sonoff. And now you see that this gap is shrinking. So Sonoff is coming closer.

They increased the prices a couple of times. We are relatively stable. We have increased the gen four a little bit. Gen three is our will be in the future our fighter model. Today, still have gen two in the markets.

So this gap is shrinking and not increasing. The gap to the top guys is increasing as well. We have always been half the price of Bosch. Now it’s like two and a half, three times or of other big competitors. So that shows that our price positioning is not deteriorating.

It is getting more aggressive and as Dimitra said, we are fighting for keeping that. And whatever will happen in the future with Chinese competitors, so even if they if they are more aggressive and they come back to the old position, we will in in in worst case, if you want, we will be as we have been two years ago and where we started conquering the market. So we are very well positioned and still we are making good results. So coming back to the the boring numbers compared to our nice products. You have seen this chart, so I don’t wanna repeat everything.

All the numbers are going in the right direction. If we go into the regions, you see that we have different developments in the regions. In all regions, we are we are growing. In all regions, we are growing above the market. The DACH region grew only, if you want, 19%.

And now, as I said, it’s complicated to say how was the market in DACH. Was it growing by 10%? I would doubt that because with all the economic situation that that we see in in Germany especially, I think we are more than twice as fast as the market. And especially in the DACH region, have one small issue with a very famous online distributor, without putting any names here, that is trying to force us into something that we don’t like. So we could make diff diff much more, sorry, much more revenue in DACH than we currently do because we are not saying yes to everything that that distributors are asking.

And especially with consequences on price visibility, price wars that we wanna avoid, we are on an excellent way here. And you see that we are more more than able to compensate what we might lose in in one channel that is not as it could be. But we could do much more if we want. So if needed, if we wanna accelerate, we can accelerate, but we are planning more in the midterm and in the long future. As well for the future, rest of Europe grew 41% and mainly driven by Italy and Nordics and I told you in the last meetings that Italy is our second biggest country.

We see a similar momentum as happened in in DACH just in this country. And in Nordics, see a very good development in the pro market. So all this is quite promising for the future because the the the size of DACH, it it’s our biggest region, biggest country with Germany, but the others have to catch up and have to develop faster and that’s happening quite fast. Rest of the world still on a low level with 34% growth as well quite promising. I have to say something here, if you compare the numbers from last year to to to what we presented a year ago, there are some very small changes because we had to make some adaptions in distributed revenues and we did this retroactive for the last year so that numbers are comparable, but on a very small level, nothing significant.

So that all looks looks quite good. If we look to the regions, everywhere growing everywhere growing above the market. If the market is 10%, five % or 20%, we don’t exactly know. We will find out, but we feel very comfortable with this. We are working, as you know, on our cash position, on the cash flow.

And from operations, we have gained 4,100,000.0 more than one year ago. It’s quite promising. We have reduced our stock. We have, on the other hand, increased our prepayments to suppliers, to Chinese suppliers and to chip manufacturers. So that there’s there are a lot of products in the pipeline that will come and we hope that we can balance that out over the year.

We had a VAT return and we have more incoming money from customers, of course. We made more revenue last year. And the other things are small adaptions. The important thing here is we have increased our equity ratio to 86.2. That’s an impressive number.

So we are really in a very healthy state and our balance sheet is very healthy. And if once again, if we need more cash, we have the possibility to take part of the of the bank line that we have secured now up to 20,000,000. So we are financially on a very safe side. That’s just a very small update. We are continually working on working capital improvement and margin measures.

As you know, we have implemented a procurement department beginning of the year that starts to pay back in in a lot of small steps. It will still take more time to have significant improvements here. This will minimum take nine to maybe maybe twelve months or even a little bit more, But constantly, we see already now that this pays back and it was the right decision to do so. Some details, I will not go into all the numbers, but as you know and as we already presented February, we have changed some distributor contracts and with this as well some accounting rules. So we have allocated some bonuses and marketing funds in a different way.

The the effect is one effect on the gross profit that goes a little bit down because more of this money is now booked against the gross profit and less against the sales and marketing cost, especially marketing cost. So that’s why you see that in the on the marketing cost side, we are even a little bit below last year. This is coming partially from this effect and it’s coming as well partially from one big trade show less in q one twenty twenty five. Last year, we we had Light and Building, very big, one of our three big trade shows. And this year this did not happen, it’s only every every second year and that’s the second effect.

On the other hand, it has as well an effect on the revenue. So if we would have booked everything like for like as a year ago, our revenue would revenue growth would even be 3% higher, round about three to 4%. But we feel more comfortable booking it this way and that does not change at all all the other numbers that we have planned for this year and for next year. Premium app. Here we have an increase from q one twenty twenty four of 134%.

So we see that still on a low level, if you compare this with 20% of customers are willing to move, that would be completely different numbers that we that we might see in in the coming years, but we are still very careful pushing this too much. But 134 more is very promising. We have changed our accounting to an accounting that is typical for software as a service in this regards. That’s why you do not see the financial effect yet. Most of our customers are choosing the annual payment, €35 and not the monthly payment.

And the annual payment, we are now changing to book it not when the money comes, but we we distribute this over twelve months. So the effect will come back during this year and especially in 2025 and 2026. If this continues growing in this speed, we are quite confident that we make a good move and a good step in recurring revenues, and that’s one of our strategic targets for the future. So Dimitar talked already about about the road map. I don’t wanna talk too much about products, but this chart I showed you in the call February, we plan to grow 25% in q one.

We actually grew 29. We plan to grow thirty, forty, and 50% in the coming quarters. We will keep that number. So we do not say that, oh, now with 5% or 4% more growth, we increase the numbers for the full year or for the next quarters. We feel comfortable having a small buffer if something surprising happens if some products are delayed or the the economic situation deteriorates more.

But we feel quite comfortable still with all these these developments and with the products coming, we see that we can confirm at this plan for the future. Dimitar said already that the new generation of products has a slightly higher margin than the old ones that as well helps, of course. And with some of the products that are that arrived in q two already, typically in very small quantities and we’ll have bigger quantities in q three and q four that explains this ramp up of the revenue curve. So then we are already with the summary. So revenue is is over target and over the internal plan with 29% versus versus 25%.

All regions are growing and we are growing especially outside of DACH. So that shows that our products work in other regions of Europe and not only in in our old core region. And the Q1 EBIT with 25.2% above our target for the Q and as well above our midterm ambition. And you know that in Q3 last year and in Q4 last year, we were a little bit below the 25%, so we are perfectly back on track. Cash level improved and we have secured a bank line on top of this.

The regional expansion will continue. We have just announced one or two weeks ago that we have opened our Polish subsidiary. The colleagues are here to have the onboarding week. We have a full team on board there. This as well will take some time to show first results, but we we are quite optimistic that we have a very good and very professional team with Adam on the top with a huge experience in that in that market.

And we are continuing to grow in the professional market, but we are as well adding channels in the do it yourself market. So we do not want to lose our strong basis in the the do it yourself market, but it looks very promising as well all the feedback that we get from Interzola and others that that this strategy to grow in the professional market pays back as well. We will have a wider product range and we will have change of products not adding up to 200 products at the end. We will keep this level of a bit more than 100. Number of app subscribers above target, so all this is promising and we confirm our guidance for ’25.

’1 hundred ’40 ’5 to 155,000,000. And for ’26 as well, 200,000,000 or above. We have started measures for working capital improvement and the first effects are visible. We we expect that this continues over the year, but we will not sacrifice revenue for having low stock or optimizing this too much. So we are very careful.

The real effects will come in in nine to twelve or fifteen months. And I already said that new product categories will support our growth. And there might be one or two surprises during the year if Bimitar’s team continues to deliver as they did in the in the past. So that’s all. If you wanna subscribe to our newsletter, here’s the the QR code.

If you did not yet, I I think most of you are. And to download the presentation, scan here or go to our investor relations website or to the the Airtime website. With this, we are open for your questions. Thank you very much.

Moderator/Facilitator: Yes. Thank you very much for your presentation and the numbers. We will now move on to the Q and A session. And for a dynamic conversation, we kindly ask you to ask your questions in person via the audio line. To do so, click on the raise your hand button.

And if you do not have the possibility to speak freely, please place your question in our chat box, and we will read them out. As we have many participants, please delete your questions from the chat box if it is answered in terms of content. So I’ll wait if there’s someone on the line for the audio question. And, otherwise, we just received a few questions in our chat box, and we’ll start with the first one. Well, yes, congratulations for successful and impressive quarter.

And the question is, on the Shelley installer finder, there are less installers in The UK compared to countries such as France, which don’t have any localized teams. Can you speak to how the expansion into The UK is proceeding and especially with just let me see. Especially with professional installers.

Logan, Executive/Presenter, Shelly: Yep. So in The UK, we currently have only one salesperson. We are looking for the country manager. And we have we had a lot of interviews, but we did not find the right profile now. If we don’t have the right profile, we will not start hiring more people because we expect the new country manager to build his team around himself.

Nevertheless, we have two very good distributors. We are present on trade shows and we see that step by step we are more visible in not only in the do it yourself market as well in the professional market. This is a little bit delayed to what we what we internally planned. On the other hand, we had the opportunity with Poland. So it’s always a mix of where do you wanna be and where do you find the right people.

And to the installer finder, yes, we have less in The UK and we have more in France. We have already a French localized website for two years that of course pays back, but both of the countries we did not actively promote our installer finder. So we just promoted it in in the DACH region, German speaking region, and in Nordics where we offer trainings, localized trainings as well and we had a couple of trainings in English language. This is more or less by coincidence. At the beginning, I mentioned that we have a long waiting line, so we have a lot of installers waiting for training in Italy, in other regions.

And during this year, this this is what I meant with phase two of the installer program is we will localize that and we’ll offer trainings in England, in The UK, in France, in Spain, in Italy, and in other regions of Europe, and in Poland of course, and in other regions of Europe. So that will come. Currently, whatever we have outside of DACH and Nordics is is is just happening because people subscribe, but it’s nothing that we have planned with. So we are overwhelmed with the long waiting line and the high interest in other regions.

Moderator/Facilitator: Well, thank you. And the follow-up on what you already said in the presentation is how big is the percentage of do it yourself versus professional in this quarter?

Logan, Executive/Presenter, Shelly: Yeah. Oh, that’s we did not check this number. I would guess it is it’s still seventy thirty because it’s really complicated to get a hard number. We cannot just go to accounting or controlling and and see what did we charge to sorry. What did we yeah.

Charge to or invoice to do it yourself retailers or online retailers because there is a there is a blurred market.

Dimitar, Product Lead/Presenter, Shelly: Can I add something? Yeah. Which is important. Okay. By number of devices is definitely seventy, thirty, maybe.

Even more for the do it yourself. But when we talk about the revenue, this is quite different. It’s fifty fifty, probably what I expect without looking directly the numbers. I’ll tell you why because all of these solar PV manufacturers, battery manufacturers, all of them, they start ordering from us the the the the the most expensive devices. This is this is the Shelli three m’s, Any kind of the energy matters, which is compared with the with the do it yourself relay, they’re five, sometimes 10 times more expensive.

And then this is the difference. By number of the installations and number of devices, you still do it yourself, but the revenue is maybe is almost equal between the professional devices for professional installation and installed to the partners and professional would compare with the do it yourself. Yes. Yeah.

Logan, Executive/Presenter, Shelly: Yeah. As as I said, it’s complicated to say. We had a visit from a big do it yourself retailer here. They told us that their estimation as well is it’s it’s a bit more than 30% pro because in in a do it yourself store, the professionals, especially the smaller ones, they go there in the morning, buy the devices that they need for the day. And that’s why I said it’s blurred.

It’s not very clear by channel because because some of the people buy this in Hanbach, Hobie or Bauhaus stores or Les Rommelins. Some buy this on in online channels, so it’s it’s really complicated to say. And we get some numbers from estimations from those channels. We get some numbers from asking our customers. It’s definitely growing the ProChair and Demeter’s right with all the feedback that and and there’s were numbers that we got from from the installers for of solar panels that they hear me talk in in hundreds and thousands of units that they buy and not in individual units.

So that’s revenue wise because the the devices are more expensive as well. That is a a clear change. Yes. We make this calculation every couple of months. So we are not following this every month.

But we can put this in the in the next presentation as a quarterly feedback as well.

Moderator/Facilitator: Well, thank you very much. Then we have from two participants questions concerning the premium app. What is currently the churn on the premium app? And can you roughly elaborate elaborate on the ratio between annual and monthly subscriptions?

Dimitar, Product Lead/Presenter, Shelly: Yeah. I can tell. With premium, Patrick is going very well. You know that we we don’t push the the the clients at all to switch to the premium because this is the such a features and such a how to say? And also competitors.

Like, it’s not like the competitors, but our our other companies like Amazon, Google, they they don’t offer premium subscription to to control your smart home. Of course, we we we offer much more sophisticated and the good features in the application. But okay. First, if there is a customers, most of them make a annual subscription, not monthly subscription,

Logan, Executive/Presenter, Shelly: which is

Dimitar, Product Lead/Presenter, Shelly: good for percent. Yeah. About 80%, they choose annual subscription, which is good for us. And the churn rate in this case is not so big, and I cannot have take the give you the the right numbers because for most of them, then also tuition is still not we starting this one in September last year, August, September, something in this period. And still the first year is is is not over.

But if I work in the monthly subscription, the churn rate is significantly significantly smaller. The number is significantly smaller compared with the customers which continue paying their monthly subscription. Yeah.

Logan, Executive/Presenter, Shelly: So Low single digit.

Dimitar, Product Lead/Presenter, Shelly: Yeah. Yeah. Absolutely. Low single digit is a churn rate, which means everything is going the right direction. But, really, we don’t want to be

Moderator/Facilitator: a Well, we just lost the connection of the video stream. Maybe they are going to fix that in a second. Please hold on until they try to fix the connection because we lost it. I can’t hear them as well. So they just try to reconnect.

And meanwhile, we just hold on to this channel. Well then, I apologize for this inconvenience but we lost the connection to the channel group by now. I’ll wait for some more seconds or maybe minutes that they reconnect, and we can see Dimita Dimitrov and mister Kirsch. Yeah. They tried to dial in for another time, so please hold on to the line, and please apologize for this inconvenience.

So, hopefully, the connection to Airtime still is online, so you can hear me in the audience. I just got the note that they still try to reconnect, so please hold on to this line. And, again, please, we apologize for this inconvenience concerning the rejoining of the Shelley Group to this call. Well, it seems that there is a severe problem because I can’t hear them clearly as they still try to reconnect to the call. So please hold on for a few seconds, hopefully not minutes, that we can restart this and follow-up on this call.

Well then, It seems that this is not an issue that they can solve in this moment. I’ll wait a few seconds and, well, I’ll suggest that because we have some more questions in the chat, Please feel free to contact investor relations directly with your questions. Well then. So we have Demita Demitrov back on the line. Perfect, guys.

So I’ll just Hello? Hello? Yes.

Dimitar, Product Lead/Presenter, Shelly: Perfect. Maybe we can mute ourselves. Okay. The the okay. The the setup has stopped working.

Can we just take one PC to continue and do us

Moderator/Facilitator: Well, yes. Perfect. To get onto this, well then Okay. I will just follow-up with the question and read them out for you. Well then, congrats to be back again, and congrats for the strong quarter.

And can you give us a bit more color on the expected margins for Shelley smart locks in 2025 and how they compare to the rest of the portfolio?

Logan, Executive/Presenter, Shelly: Yeah. It looks like similar as the other products. So we will not have maybe they are single digit percentage lower, but have a very much higher revenue because of the high value of the products. And currently, we are keeping the selling prices, reducing them even a little bit because we see the first effects from bigger quantities and as well our other economies like better chip prices to bring the cost price a little bit down. So we expect the margin to be similar to the margin of our other products.

Moderator/Facilitator: Well, great. Thank you. And then there’s a question concerning the update on a new factory in Bulgaria. When you will announce and give us more information that you are building a new

Dimitar, Product Lead/Presenter, Shelly: factory in Bulgaria? Right now. It’s it’s too early, by the way, and we don’t know the to raise the expectations. But new factory in Bulgaria First, we make our first production from United States in Bulgaria, a test production this month, which is good. Now we we start to make in the in the in the big quantities here in Bulgaria, especially for United States.

And this could happens in end of the June, beginning of July. We’ll start the biomass production. About the factory, we already rented the space. We’re preparing the space. But by the way, we’re expecting machines to be delivered end of the end of the year.

Mean, let’s say, September, October machines to be delivered, which mean the factory will be live beginning of next year. January, February will start working. And then we can have a much much deeper update. We can have a tour, a video tour, and everything about the factory. But, yeah, usually, the the the delivery time is about six months for such machines.

For that, we expect to be they to be there end of the year.

Moderator/Facilitator: Thanks. And another question from one of the participants. Would you be able to share a bit more about how things are progressing with Shelley X? How many products do you expect to present over the course of the year?

Dimitar, Product Lead/Presenter, Shelly: Okay. Well, ShellEx and the products. I I will take this one. Currently, there’s four or five products on the market. Still, about $15 is ongoing products, and we expect to be released in q end to the q two beginning and also during the q three.

It’s very dynamic because every day, more and more companies start tasking, cooking for the ShellEx. It’s take a time. Probably to enter there, we expect at least to have at least 20 to 30 products will be powered by Shari products, which will be available through our website and also through our distributors and also by the manufacturers of these appliances. And, yeah, the it’s it’s just ongoing process, and we’ve seen a really huge interest, especially for the bulk producers, for the white white manufacturers. But not only very soon, I don’t want to share some additional details because this is the confidential.

Very soon, you’ll see very some of the much bigger appliances than shared devices, which using our techno connectivity technology.

Moderator/Facilitator: Well, thank you very much. And, well, yeah, that’s a pretty good question. For how many years do you think you can continue to expand above 30% a year?

Dimitar, Product Lead/Presenter, Shelly: Next ten years, what about? I don’t know.

Logan, Executive/Presenter, Shelly: Ten

Dimitar, Product Lead/Presenter, Shelly: years. Ten, twenty. I don’t know. Maybe some will be more. No.

Logan, Executive/Presenter, Shelly: To have a to have a serious answer, we are we are still a small player in that market. The the smart home, smart building market is big, and we are growing nice. We are we are ahead of of competition technology wise, so we expect to to grow faster than the market. And and that’s something we said on our Capital Market Day. The market is expected to grow 10 to 15%, and we historically outperformed the market three or four times.

We think that this will go down to two or three times. But there are enough regions where we just start. There are enough product categories where we are not in. We have so much, so many projects that that are just starting and that will pay back in ’26, ’20 ’7, ’20 ’8. So until 2030, we think we will continue growing above the market.

And now currently, the market in our in our biggest region is a bit suffering, so it’s not that that positive. But as again, I don’t really know how how big is it. It’s only grown 5% of hemp. But we think that two to three times the market growth is that what we expect over the next four, five, six, seven years, ten years. Yeah.

There is no real limit. We are not we are not a couple of billion euro dollar

Dimitar, Product Lead/Presenter, Shelly: Maybe the is how many years we continue. We wanna continue only with 30% of Europe. It’s it’s a yeah. Okay.

Moderator/Facilitator: Well, a related question maybe or a statement. Can you expand on this question? Although momentum eased somewhat due to ongoing macroeconomic macroeconomic headwinds.

Logan, Executive/Presenter, Shelly: Say it again. Yeah.

Moderator/Facilitator: Although momentum eased somewhat, what is about the ongoing macroeconomic headwinds?

Logan, Executive/Presenter, Shelly: I mean, if we usually say bad markets are shelly markets Mhmm. Because we we have if the market is is is bad, negative, if people, end users, and as well companies try to keep their money together, but they need to invest in energy management systems. They need to invest in home automation or building automation, office automation. They try to to find solutions that are reliable and cheaper than the than the very high end products on the market. And today, showed price comparisons.

Compared to some of the big players in the market, we have half the price or below half the price. And interesting enough that some of the big players are contacting us in some cases because what they wanna do for big project is they wanna be visible in the central breaker box, so someone opens the big doors and sees a very famous brand. And then where it’s not that visible, they they themselves try start to offer Shelley devices because it reduces the total cost for the whole project. And that is something that is helping us. So we are technology wise.

We are well advanced. We are way better than than a do it yourself brand or a Chinese brand. We are seen as a very reliable professional brand now more and more, and this will increase with the next generations of products even more. So we are in a very good situation. And especially if the markets are a bit under pressure and people don’t say, come up.

I don’t care if the relay costs a hundred euros or €50 or €30. It’s only, I don’t know, 50 relays that I need. So that starts to sum up to a big amount, and that’s that’s good for us. That helps us. On the on the on the other side, at the beginning of the presentation, I said we are seen as the standard in solar industry, and that as well helps.

So if the standard is half the price of of very big international known brands, I don’t wanna say names, but, that that is that’s something that is super positive for us and creates more pressure on the on the bigger brands than on us.

Moderator/Facilitator: Thank you very much. And then we have a question, well, I’ll send it directly to mister Kush. Can you give us details about sales in different countries in South America? No. That’s a short one and a good one.

Well, then let’s move on.

Logan, Executive/Presenter, Shelly: Of course, I could, but it has a good reason that we are reporting in regions. Because if I, once start, tell you how much revenue are we doing in Chile, in Brazil, and and then this question will come every time. And then we if one country is minus 5% instead of plus 10, then another question comes. So we have a clear reporting. We stick to that, and we cannot disclose numbers beyond it.

We are growing in South America in total. We are there on a on a small level as it’s it’s part of rest of the world, so it’s not breathtaking. We see some demands. We see especially some professional demand coming as well. We have one cooperation with a very well known switch manufacturer that is very strong in South America that can open some doors for the future.

So that’s all promising, but it’s it’s as well not one of our core market and key markets. We grow there. We take what we get, and it’s for the time being, that’s fine.

Moderator/Facilitator: Fine. Thanks for the statement. And we have another participant. Well, he just begins his question or his statement with addressing the elephant in the room, US tariffs. I know it’s low share of revenue, but what is your assessment of the growth opportunity in this environment?

You last mentioned in conversation during BSE Investor Day, you haven’t been yet charged any tariffs so far. Has this changed? Assuming current lower 30% tariffs on China, say, what is your competitive position?

Dimitar, Product Lead/Presenter, Shelly: Currently, this which tariffs we talk about? The tariffs are months ago, a week ago, two hours ago, or two hours after? You know? That’s completely irrelevant. We we have enough stock at the moment in United States to continue selling.

And let’s say to waiting what will happen finally with the tariffs. We don’t care about Islam. We have opportunity anyhow. We’re moving The US production in Bulgaria. It’s far away not only about the tariffs.

I see the general political situation is in our favor from one side because the Americans and also the Europeans start being much more careful about the data protection and who can exactly controlling the PV system, can the measuring their their houses, who can switch on and off. For me, it’s a very interesting situation. Then when the Spain and Portugal in this bulk part of the Europe, they have a huge power outage because something happens with the solar system. Don’t forget that the current situation that the 90% of the solar systems is reporting to the, for example, the Asian clouds. Let’s see like that.

And for them, it’s very easy to operate and to switch something on and off if they wanna do that. And but this is coming to be a concern in the future, which mean everything related to the to in that direction also must be related. Maybe in the maybe in the future, the people will understand that it’s most important to pay a little bit more, but to have a a solution from the company which is a transport company, European based, and something than than the tariffs and how much they will pay or not to pay anything. But currently, I’m going to stress about the tariff is completely unreliable. Nobody know what exactly we’ll pay in one time, and something can we just need to to move a little bit.

Logan, Executive/Presenter, Shelly: So beside unreliable, we are quite happy that the elephant in this room is not so big because the room is small. Yeah. Because in this case, United States is not one of our core markets. So whatever happens there with tariffs, plus 100%, plus zero, plus 300% has, first of all, on our business, a very limited influence. Dimita already said we have enough stock in The US to to live for a while.

We have adapted our prices already before the tariffs came, and we see no negative impact on our revenue. And now if tariffs come, and let’s say the tariffs are a % on smart home products, every smart home product is coming as well, the big US companies, is coming from China. So they have to pay 50 sorry, a % import tax tariff on a hundred dollar product as we have to pay that on a $20 product. So the gap between the price points will increase and not shrink. So if there is an effect, it can even have a positive effect on us.

But regardless, it’s for us, it’s not an issue. It’s nothing we talk about every day. It’s nothing that keeps us awake at night because the effect is very limited. And we still have the option to ship products from Europe because here is our main warehouse, and we do this anyhow. And we have different tariffs if we if we ship from here, then we ship from China.

So that’s another option that we have. So the elephant is shrinking.

Dimitar, Product Lead/Presenter, Shelly: Yeah.

Moderator/Facilitator: Well then, thank you for this strong and pretty clear statement, and I’ll take one last question. I’ll read it out. Are you currently able to compete with TUYA using your Shell eX, or do you see a need to further develop your software support or hardware in order to do so? We would appreciate if you could elaborate further on this. And a quick follow-up.

Looking ahead, what proportion of your revenue do you expect and could eventually come from Shellex?

Dimitar, Product Lead/Presenter, Shelly: Okay. First, we don’t want we cannot and we don’t want compete with Twilio. Because if you ask Twilio every if you see all Twilio devices and ask every consumer manufacturer distributors, Twilio is directly related to the cheap Chinese sheet, which somebody provide them the connectivity technology. This is the the companies which using the Twilio. Twilio give their technology to everyone which want it.

For example, a hundred bulk producer or maybe a 10,000 bulk producer or manufacturers in China, and they give it they give it the same technology to all of them. What happens on that? They need to compete by pricing. In one moment, pricing is very low, then they start then the quality start decreasing. And this is this is the circle which is a dent.

There there’s no no good for for nobody. And also, as you know, the last few years, Twilio losing a hundred hundred 50,000,000 easily on annual base, which is which is not believe me, we don’t want to to compete them at all. We wanna provide our technology first to US and European based company, which is much market about the connectivity technology. And even that yeah. And if you’re working with the Chinese one, we wanna choose one, two, three book manufacturers and to offer only to them the technology, but this manufacturer, we will prove on us high quality manufacturers.

And this is let’s say, there will be selective partners which we’re using our chips and who do which because we don’t want to ruin the the brand and don’t want to ruin with somebody who’s just playing the the the the the price game. And finally, the customer said, no. We’re I have a huge respect to Twilio until we start testing the devices powered by Twilio. I have no idea how they work. I don’t know how how people like it because, you know, when they start working, we start first first idea is very easy.

This device is Twilio. We can make it. The manufacturer already know what he’s doing. Let’s just replace the module. And we found that working and good working is a completely different ways.

Yeah. The device is working, but customer’s completely not satisfied. And we need to start with manufacturer to explain them why they need to improve the quality, why they need to add some kind of features, why they need to why these things is important, not just not the simple things on and off, but they need to make it more. And, yeah, I think we will be, let’s say, maybe in the future, we’ll be driver driver driver for the two to improve also their one quality. But directly directly, we don’t see that we will be direct competitors for everybody.

We’ll be much more important for the good brands which one is the technology, and we’ve seen that this increase increasing.

Moderator/Facilitator: Well, thank you very much. And as I said, that was the last question and your last answer for today. Thanks for joining. We come to the end of today’s earnings call. Should any further questions arise at a later time, please feel free to contact Investor Relations.

Thank you to you, you gentlemen, for the presentation and the time you took the answers. And as well, I wish you all a lovely remaining week. And with this, I hand over for some famous last words to you, mister Dimitrov.

Dimitar, Product Lead/Presenter, Shelly: Not me. Okay. Of course. Okay. I have to say everything is going well.

Everybody asking us how it’s going. It’s going well. A lot of challenges. Every day, daily challenges, challenges with the with the in the production because the quantity is quite there is is more different challenges with the suppliers because they need to deliver, and they have their own promise. We need to handle it.

But until now, we’re showing that we can handle this one on the right way. The company is going in a in a in a very good way. And, yes, everything which we ask asking and we ask for for, we can stay behind that. We’re going in that direction. And direction, maybe in time, we we need to change it, but for good and expecting, we don’t show everything which we know, of course.

Because first, maybe we don’t want to overestimate your what from your side, what we where we’re going. And the second one, we also especially from the product side, we wanna keep a little bit the most important devices information hidden because we know that this calls also that there’s a competitors. Maybe we could watch it, and there’s information information which we which which will be shared, and we don’t want to. But, yeah, thank you very much for your support. Thank you very much for participation.

Maybe Nothing something nothing to add. Thanks.

Logan, Executive/Presenter, Shelly: See you

Dimitar, Product Lead/Presenter, Shelly: in a few months. Thank you.

Moderator/Facilitator: Bye bye.

Dimitar, Product Lead/Presenter, Shelly: Bye bye.

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