Half Year 2026 Osram Licht AG Earnings Call

August 4, 2026

Speaker #1: We'll walk you through the financials. Please refer to the Q2 earnings call presentation that is available on our website, and with that, Aldo, please take us through the quarter.

Speaker #2: Thank you, Jurgen. And also, good morning from my side. We delivered a lot of strong quarter, with revenue and adjusted EBITDA both landing at the high end of our guidance range, while continuing to execute on our digital photonics strategy.

Operator: Ladies and gentlemen, welcome to the ams OSRAM conference call on Q2 2026 results and webcast. I am Sergen, the conference call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and one on your telephone. For operator assistance, please press star and zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Jürgen Rebel, Head of Investor Relations. Please go ahead.

Speaker #1: Ladies and gentlemen, welcome to the ams OSRAM conference call on Q2 2026 results and live broadcast. I'm Jürgen Rebel, the Chorus Call operator. I would like to remind you that all participants will be in listen-only mode and that the conference is being recorded.

Speaker #2: Let us turn to slide 3. Our semiconductor core business grew 13% year-on-year on a like-for-like basis, driven by automotive strength and improving industrial demand.

Speaker #2: This nearly twice the growth implied by our current midterm semiconductor model and underscored share gains. We also delivered record-first half design wind performance, secured more than 1.6 billion of future business just in the second quarter alone.

Speaker #1: The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone.

Speaker #2: Momentum is building across both our core semiconductor franchise and our digital photonics growth platforms, reinforcing confidence in our long-term growth trajectory. In digital photonics, we achieved several important milestones during the quarter.

Speaker #1: For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Jürgen Rebel as our Investor Relations.

Speaker #1: Please go ahead.

Speaker #2: First, we strengthened organizational setup by creating dedicated business lines around key digital photonics teams, accelerating execution and enabling faster scaling of innovation. We also strengthened the team with external talent, ashkanchayedi from NVIDIA now leads our AI photonics business, bringing deep industry expertise and application know-how.

Speaker #2: Good morning. This is Jürgen speaking. Welcome to our Q2 2026 earnings call. Aldo, our CEO, will comment on business performance and strategic progress, and Rainer, our CFO, will walk you through the financials.

Jürgen Rebel: Good morning. This is Jürgen speaking. Welcome to our Q2 2026 earnings call. Aldo, our CEO, will comment on business performance and strategic progress. Rainer, our CFO, will walk you through the financials. Please refer to the Q2 earnings call presentation that is available on our website. With that, Aldo, please take us through the quarter.

Speaker #2: Please refer to the Q2 earnings call presentation that is available on our website. And with that, Aldo, please take us through the quarter.

Speaker #2: Second, we reached key performance milestones in the development of micro LED array-based light engines for next-generation AI-enabled AR smart glasses. Bringing the platform closer to mass production readiness.

Speaker #3: Thank you, Jürgen. And also, good morning from my side. We delivered on a lot of strong quarters, with revenue and adjusted EBITDA both landing at the high end of our guidance range, while continuing to execute on our digital photonics strategy.

Aldo Kamper: Thank you, Jürgen, and also good morning from my side. We delivered another strong quarter, with revenue and adjusted EBITDA both landing at the high end of our guidance range while continuing to execute on our digital photonics strategy. Let us turn to slide three. Our semiconductor core business grew 13% year-on-year on a like-for-like basis, driven by automotive strength and improving industrial demand. This is nearly twice the growth implied by our current midterm semiconductor model and underscores share gains. We also delivered a record H1 design win performance, securing more than EUR 1.6 billion of future business just in the Q2 alone. Momentum is building across both our core semiconductor franchise and our digital photonics growth platforms, reinforcing confidence in our long-term growth trajectory. In digital photonics, we achieved several important milestones during the quarter.

Speaker #2: This positions us to enable a new class of AI-powered user experiences. Third, an AI photonics we expanded our roadmap by starting development of micro photodiode arrays for the receive channel of slow and wide optical interconnects.

Speaker #3: Let us turn to slide 3. Our semiconductor core business grew 13% year-on-year on a like-for-like basis, driven by automotive strength and improving industrial demand.

Speaker #2: This broadens our target portfolio, increases our bill of material opportunity, and supports our long-term objective of providing the complete optical engine. Fourth, on the sensing side of digital photonics, we secured initial design wins for our benchmark 3D multi-zone TOF platform in both robotics and smartphones.

Speaker #3: This is nearly twice the growth implied by our current midterm semiconductor model and underscores share gains. We also delivered record first-half design win performance, securing more than $1.6 billion of future business just in Q2 alone.

Speaker #3: Momentum is building across both our core semiconductor franchise and our digital photonics growth platforms, reinforcing confidence in our long-term growth trajectory. In digital photonics, we achieved several important milestones during the quarter.

Speaker #2: Taken together, these milestones demonstrate that digital photonics is progressing from technology development toward productization and commercial scale. As part of our balance sheet improvement plan, we successfully placed $1 billion senior nodes due 2020-32 with a 7.25 coupon, replacing much more expensive 29s this reduces our annual interest cost by $40 million.

Speaker #3: First, we strengthened our organizational setup by creating dedicated business lines around key digital photonics teams, accelerating execution and enabling faster scaling of innovation. We also strengthened the team with external talent: Arscan Chayeli from NVIDIA now leads our AI photonics business, bringing deep industry expertise and application know-how.

Aldo Kamper: First, we strengthened our organizational setup by creating dedicated business lines around key digital photonics teams, accelerating execution, enabling faster scaling of innovation. We also strengthened our team with external talent. Ash Seyedi from NVIDIA now leads our AI photonics business, bringing deep industry expertise and application know-how. Second, we reached key performance milestones in the development of Micro LED array-based light engines for next generation AI-enabled AR smart glasses, bringing the platform closer to mass production readiness. This positions us to enable a new class of AI-powered user experiences. Third, in AI photonics, we expanded our roadmap by starting development of micro photodiode arrays for the receive channel of slow-and-wide optical interconnects. This broadens our target portfolio, increases our bill of material opportunity, and supports our long-term objective of providing the complete optical action.

Speaker #2: We also continue to sharpen our portfolio and cap the allocation focus through this assessment of known core businesses. On July 1st, we completed assessment of our non-optical sensor business to Infineon for $570 million.

Speaker #3: Second, we reached key performance milestones in the development of micro-LED array-based light engines for next-generation, AI-enabled AR smart glasses, bringing the platform closer to mass production readiness.

Speaker #2: In addition, we signed an assessment of our sub-scale CMOS image sensor business to Indy to further sharpening our strategic focus and doubling down on the most promising digital photonics opportunities.

Speaker #3: This positions us to enable a new class of AI-powered user experiences. Third, in AI photonics, we expanded our roadmap by starting development of micro photodiode arrays for the Receive channel of slow and wide optical interconnects.

Speaker #2: In summary, the quarter reflects strong execution across our strategic priorities, with profitable growth in the core business, continued progress in digital photonics, and a further balance sheet strengthening.

Speaker #2: Let me now ask Rainer to walk you through some of the financial details.

Speaker #3: This broadens our target portfolio, increases our bill-of-materials opportunity, and supports our long-term objective of providing the complete optical engine. Fourth, on the sensing side of digital photonics, we secured initial design wins for our benchmark 3D multi-zone ToF platform in both robotics and smartphones.

Speaker #1: And thank you, Aldo. Good morning from my side.

Speaker #3: As well. Now, turning to slide 4, Q2 was another strong quarter. With revenues reaching $8.05 million, lending well in the upper half of our guidance range.

Aldo Kamper: Fourth, on the sensing side of digital photonics, we secured initial design wins for our benchmark 3D multi-zone ToF platform in both robotics and smartphones. Taken together, these milestones demonstrate that digital photonics is progressing from technology development towards productization and commercial scale. As part of our balance sheet improvement plan, we successfully placed EUR 1 billion senior notes due 2032 with a seven-and-a-quarter coupon, replacing much more expensive 2019s. This reduces our annual interest cost by EUR 40 million. We also continue to sharpen our portfolio and capital allocation focus through the divestment of non-core businesses. On 1 July, we completed divestment of our non-optical sensor business to Infineon for EUR 570 million. In addition, we signed the divestment of our subscale CMOS image sensor business to Indie, further sharpening our strategic focus and doubling down on the most promising digital photonics opportunities.

Speaker #3: Adjusted EBITDA was close to 70%, the high end of our guidance, supported by strong performance across all three divisions. Revenue increased 4% year-on-year and 9% on the like-for-like basis, at constant currency.

Speaker #3: Taken together, these milestones demonstrate that digital photonics is progressing from technology development toward productization and commercial scale. As part of our balance sheet improvement plan, we successfully placed $1 billion senior notes due 2032, with a 7.25% coupon.

Speaker #3: Replacing much more expensive 29s, this reduces our annual interest cost by $40 million. We also continue to sharpen our portfolio and cap the allocation focus through this investment in non-core businesses.

Speaker #3: Adjusted EBITDA was slightly lower year-on-year, primarily reflecting the deconsolidation of the specialty lines business. Higher gold prices and foreign exchange headwinds also weighed on profitability.

Speaker #3: Now, let's have a look at the segment performance on slide 5. OS benefited from strong demand across the board. Revenues improved 11% sequentially, and 6% year-on-year.

Speaker #3: On July 1, we completed the divestment of our non-optical sensor business to Infineon for $570 million. In addition, we signed an agreement to divest our sub-scale CMOS image sensor business to Indy, further sharpening our strategic focus and doubling down on the most promising digital photonics opportunities.

Speaker #3: In several product lines, supply remains constrained, and we are effectively sold out. Adjusted EBITDA improved in line with operating leverage, partially offset by higher raw material costs, particularly gold.

Speaker #3: In summary, the quarter reflects strong execution across our strategic priorities, with profitable growth in the core business, continued progress in Digital Photonics, and further balance sheet strengthening.

Aldo Kamper: In summary, the quarter reflects strong execution across our strategic priorities with profitable growth in the core business, continued progress in digital photonics, and a further balance sheet strengthening. Let me now ask Rainer to walk you through some of the financial details.

Speaker #3: Year-on-year, adjusted EBITDA declined by $40 million, despite higher revenue, reflecting FX headwinds and more than 25% increase in gold prices and product mix effects.

Speaker #3: Let me now ask Rainer to walk you through some of the financial details.

Speaker #4: Thank you, Aldo. Good morning from my side as well. Now, turning to slide 4, Q2 was another strong quarter, with revenues reaching €8.5 million, landing well in the upper half of our guidance range.

Rainer Irle: Thank you, Aldo. Good morning from my side as well. Now turning to slide four. Q2 was another strong quarter, with revenues reaching EUR 805 million, landing well in the upper half of our guidance range. Adjusted EBITDA was close to 17%, the high end of our guidance, supported by strong performance across all three divisions. Revenue increased 4% year-on-year and 9% on a like-for-like basis at constant currency. Adjusted EBITDA was slightly lower year-on-year, primarily reflecting the deconsolidation of the specialty lamps business. Higher raw prices and foreign exchange headwinds also weighed on profitability. Now let's have a look at the segment performance on slide five. OS benefited from strong demand across the board. Revenues improved 11% sequentially and 6% year-on-year. In several product lines, supply remains constrained, and we are effectively sold out.

Speaker #3: TSA benefited from a broad-based industrial recovery, including some inventory replenishment in the non-optical sensor business prior to its divestment to Infineon. Revenue increased 14% sequentially and 7% year-on-year.

Speaker #4: Adjusted EBITDA was close to 70%, the high end of our guidance, supported by strong performance across all three divisions. Revenue increased 4% year-on-year and 9% on a like-for-like basis at constant currency.

Speaker #3: Profitability improved on higher volumes, strong factory utilization, and a favorable mix from industrial and medical applications. Year-on-year, adjusted EBITDA remained broadly stable. And lens and systems certainly requires a closer look.

Speaker #4: Adjusted EBITDA was slightly lower year-on-year, primarily reflecting the deconsolidation of the Specialty Lines business. Higher gold prices and foreign exchange headwinds also weighed on profitability.

Speaker #3: Sequentially, revenue declined as expected, due to normally seasonality and the deconsolidation of the specialty lamps business. Year-on-year, the revenue declined a bit due to the deconsolidation effect.

Speaker #4: Now, let's have a look at the segment performance on slide 5. OS benefited from strong demand across the board. Revenues improved 11% sequentially and 6% year-on-year.

Speaker #3: Importantly, our traditional automotive lamps business delivered structural growth, supported by market share gains following the bankruptcy of a key competitor. Profitability reflected the deconsolidation of specialty lamps and lower seasonal volumes quarter on quarter.

Speaker #4: In several product lines, supply remains constrained and we are effectively sold out. Adjusted EBITDA improved in line with operating leverage, partially offset by higher raw material costs, particularly gold.

Rainer Irle: Adjusted EBITDA improved in line with operating leverage, partially offset by higher raw material costs, particularly gold. Year-on-year adjusted EBITDA declined by EUR 40 million despite higher revenue, reflecting FX headwinds, a more than 25% increase in gold prices, and product mix effects. TSA benefited from a broad-based industrial recovery, including some inventory replenishment in the non-optical sensor business prior to its divestment to Infineon. Revenue increased 14% sequentially and 7% year-on-year. Profitability improved on higher volumes, strong factory utilization, and the favorable mix from industrial medical applications. Year-on-year adjusted EBITDA remained broadly stable. Lamps and systems certainly requires a closer look. Sequentially, revenue declined as expected due to normal seasonality and the deconsolidation of the specialty lamps business. Year-on-year, the revenue declined a bit due to the deconsolidation effect.

Speaker #3: Year-on-year, adjusted EBITDA increased 16%, driven by strong aftermarket demand and higher factory utilization. Overall, we delivered a strong quarter across our corporate portfolio, with all three divisions contributing to revenue growth and profitability.

Speaker #4: Year-on-year, adjusted EBITDA declined by €40 million despite higher revenue, reflecting FX headwinds, a more than 25% increase in gold prices, and product mix effects.

Speaker #4: TSA benefited from a broad-based industrial recovery, including some inventory replenishment in the non-optical sensor business prior to its divestment to Infineon. Revenue increased 14% sequentially and 7% year-on-year.

Speaker #3: Turning to slide 6, adjusted for the weaker US dollar and the exit at non-corp portfolio, our core CME portfolio grew by a really strong 13% year-on-year.

Speaker #3: As a side note, the non-corp portfolio is now largely run down, contributing only around $10 million of residual revenue. Looking at our end mark, automotive continued to perform well, and increased sequentially, supported by strong order intake during the quarter.

Speaker #4: Profitability improved on higher volumes, strong factory utilization, and a favorable mix from industry and medical applications. Year-on-year, adjusted EBITDA remained broadly stable. NLMs and Systems certainly require a closer look.

Speaker #4: Sequentially, revenue declined as expected, due to normal seasonality and the deconsolidation of the Specialty Lines business. Year-on-year, the revenue declined a bit due to the deconsolidation effect.

Speaker #3: We continue to benefit from share and content gains, although we believe some restocking also contributed against the backdrop of macroeconomic uncertainty. Importantly, our automotive LED business grew 5% year-on-year on a like-for-like basis, demonstrating the impact of a design win's accumulated over the recent years.

Speaker #4: Importantly, our traditional automotive lines business delivered structural growth, supported by market share gains following the bankruptcy of a key competitor. Profitability reflected the deconsolidation of specialty lines and lower seasonal volumes quarter-on-quarter.

Rainer Irle: Importantly, our traditional automotive lamps business delivered structural growth supported by market share gains following the bankruptcy of a key competitor. Profitability reflected the deconsolidation of specialty lamps and lower seasonal volumes quarter-on-quarter. Year-on-year adjusted EBITDA increased 16%, driven by strong aftermarket demand and higher factory utilization. Overall, we delivered a strong quarter across our core portfolio, with all three divisions contributing to revenue growth and profitability. Turning to slide six. Adjusted for the weaker US dollar and the exited non-core portfolio, our core semi portfolio grew by a really strong 13% year-on-year. As a side note, the non-core portfolio is now largely wound down, contributing only around EUR 10 million of residual revenue. Looking at our end market. Automotive continued to perform well and increased sequentially, supported by strong order intake during the quarter.

Speaker #3: Performance improved across all regions, except China, where end market demand remained softer, and competitive intensity elevated. Industrial medical continued to recover strongly, with revenues increasing approximately 30% sequentially, and nearly 20% year-on-year.

Speaker #4: Year-on-year, adjusted EBITDA increased 16%, driven by strong aftermarket demand and higher factory utilization. Overall, we delivered a strong quarter across our core portfolio, with all three divisions contributing to revenue growth and profitability.

Speaker #3: We saw a strong upswing in Horti and continued strength in professional lighting, where we are gaining share, particularly in mid-power applications. Order intake and non-optical sensors was also very strong, reflecting elevated customer demand ahead of the business transfer.

Speaker #4: Turning to slide 6, adjusted for the weaker US dollar and the exited non-core portfolio, our core CME portfolio grew by a really strong 13% year-on-year.

Speaker #3: Overall, we continue to gain market share across multiple end markets. Consumer performed better than typical seasonal patterns would suggest. Revenue grew sequentially, supported by strong sales through at selected customers, despite a softer smartphone market overall.

Speaker #4: As a side note, the non-core portfolio is now largely run down, contributing only around €10 million of residual revenue. Looking at our end markets, automotive continued to perform well and increased sequentially, supported by strong order intake during the quarter.

Speaker #4: We continued to benefit from share and content gains, although we believe some restocking also contributed against the backdrop of macroeconomic uncertainty. Importantly, our automotive LED business grew 5% year-on-year on a like-for-like basis, demonstrating the impact of design wins accumulated over recent years.

Speaker #3: Our portfolio remains focused on premium smartphones and high-end wearables. Year-on-year, revenue increased slightly, despite foreign exchange headwinds and the phase-out of non-corp portfolio elements.

Rainer Irle: We continue to benefit from share and content gains, although we believe some restocking also contributed against the backdrop of macroeconomic uncertainty. Importantly, our automotive LED business grew 5% year-on-year on a like-for-like basis, demonstrating the impact of the design wins accumulated over the recent years. Performance improved across all regions except China, where end market demand remained softer and competitive intensity elevated. Industrial and medical continued to recover strongly, with revenues increasing approximately 30% sequentially and nearly 20% year-on-year. We saw a strong upswing in HOREE and continued strength in professional lighting, where we are gaining share, particularly in mid-power applications. Order intake in non-optical sensors was also very strong, reflecting elevated customer demand ahead of the business transfer. Overall, we continue to gain market share across multiple end markets. Consumer performed better than typical seasonal patterns would suggest.

Speaker #3: And with that, let me ask Aldo to comment on design wins and the latest process progress in digital photonics.

Speaker #4: Performance improved across all regions except China, where end market demand remained softer and competitive intensity increased. Industrial Medical continued to recover strongly, with revenues increasing approximately 30% sequentially and nearly 20% year-on-year.

Speaker #1: Thank you, Rainer. And we're now turning to slide 7. We have just seen how past design wins are translating into growth, market share gains, and stronger business performance today.

Speaker #1: Our design momentum accelerated significantly in Q2, we secured more than $1.6 billion of new business, bringing the first half total to approximately $2.5 billion, a first half record.

Speaker #4: We saw a strong upswing in Horti and continued strength in professional lighting, where we are gaining share, particularly in mid-power applications. Order intake in non-optical sensors was also very strong, reflecting elevated customer demand ahead of the business transfer.

Speaker #1: The wins were brought to base with more than $1,300 individual projects awarded during the quarter. Automotive was strong once again, with demand across the entire portfolio and particular strength in advanced forward lighting.

Speaker #1: Industrial design wins were driven by professional lighting and horticulture applications, consumer design wins included significant programs in display management and ambient light sensing for smartphones, despite ongoing memory-related constraints in part of the ecosystem.

Speaker #4: Overall, we continued to gain market share across multiple end markets. Consumer performed better than typical seasonal patterns would suggest. Revenue grew sequentially, supported by strong sales through at selected customers, despite a softer smartphone market overall.

Rainer Irle: Revenue grew sequentially, supported by strong sell-through at selected customers, despite a softer smartphone market overall. Our portfolio remains focused on premium smartphones and high-end wearables. Year-on-year, revenue increased slightly despite foreign exchange headwinds and the phase-out of non-core portfolio elements. With that, let me ask Aldo to comment on design wins and the latest progress in digital photonics.

Speaker #1: We also continue to make progress across our digital photonics portfolio. EVIOS further strengthened its position as the leading advanced forward lighting technology, with design wins exceeding $50 million during the quarter.

Speaker #4: Our portfolio remains focused on premium smartphones and high-end wearables. Year on year, revenue increased slightly, despite foreign exchange headwinds and the phase-out of non-core portfolio elements.

Speaker #1: We're also seeing strong interest from new customers in China. Advanced optical sensing, our new multi-zone soft platform secured its first design wins in robotics and smartphones.

Speaker #4: And with that, let me ask Aldo to comment on design wins and the latest process progress in digital photonics.

Speaker #1: Augmented reality, we achieved key development milestones, bringing our micro light engine platform closer to volume production readiness. AI photonics, we expanded our roadmap and moved micro photodiode arrays into full product development, further increasing our opportunity to participate in the complete optical engine in the future.

Speaker #2: Thank you, Rainer. And we're now turning to slide 7. We have just seen how fast design wins are translating into growth, market share gains, and stronger business performance today.

Aldo Kamper: Thank you, Rainer. We're now going to slide seven. We have just seen how fast design wins are translating into growth, market share gains, and stronger business performance today. Our design momentum accelerated significantly in Q2. We secured more than EUR 1.6 billion of new business, bringing the H1 total to approximately EUR 2.5 billion, an H1 record. The wins were broad-based, with more than 1,000 wins individual projects awarded during the quarter. Automotive was strong once again, with demand across the entire portfolio, and particular strength in advanced forward lighting. Industrial design wins were driven by professional lighting and horticulture applications. Consumer design wins included significant programs in display management and ambient light sensing for smartphones, despite ongoing memory-related constraints in part of the ecosystem. We also continue to make progress across our digital photonics portfolio.

Speaker #2: Our design momentum accelerated significantly in Q2. We secured more than €1.6 billion of new business, bringing the first half total to approximately €2.5 billion, a first-half record.

Speaker #1: Taken together, these wins reinforced two important trends: continued share gains in our core semiconductor business and growing customer traction in digital photonics. Let's take a closer look on slide 8.

Speaker #2: The wins were broadly based, with more than 1,300 individual projects awarded during the quarter. Automotive was strong once again, with demand across the entire portfolio and particular strength in advanced forward lighting.

Speaker #1: EVIOS is our flagship digital photonics product and a market leader in advanced forward lighting. Revenues continued to grow, and we continued to secure new design wins.

Speaker #2: Industrial design wins were driven by professional lighting and horticulture applications. Consumer design wins included significant programs in display management and ambient light sensing for smartphones, despite ongoing memory-related constraints in part of the ecosystem.

Speaker #1: Beyond its contribution to our ongoing share and content gains, EVIOS is enabling a new generation of intelligent automotive lighting applications. We recently launched NEO ET9, flagship, showcasing the platform's advanced projection capabilities.

Speaker #2: We also continue to make progress across our digital photonics portfolio. EVAIOS further strengthens its position as the leading advanced forward lighting technology, with design wins exceeding €50 million during the quarter.

Speaker #1: The system enables visual communication with pedestrians and other road users. Enhanced situational awareness and contributes to improved road safety. It also supports the driver in complex traffic situations through dynamic projected guidance information.

Aldo Kamper: EVIYOS further strengthened its position as the leading advanced forward lighting technology, with design wins exceeding EUR 50 million during the quarter. We're also seeing strong interest from new customers in China. Advanced optical sensing. Our new multi-zone ToF platform secured its first design wins in robotics and smartphones. Augmented reality. We achieved key development milestones, bringing our Micro LED light engine platform closer to volume production readiness. AI photonics expanded our roadmap and moved micro photodiode arrays into full product development, further increasing our opportunity to participate in the complete optical engine in the future. Taken together, these wins reinforce two important trends: continued share gains in our core semiconductor business and growing customer traction in digital photonics. Let's take a closer look on slide eight. EVIYOS is our flagship digital photonics product and the market leader in advanced forward lighting.

Speaker #2: We're also seeing strong interest from new customers in China. Advanced optical sensing—our new multi-zone SOFT platform—secured its first design wins in robotics and smartphones.

Speaker #1: Importantly, as OEMs gain experience with EVIOS and software-defined lighting architectures, we continue to see new use cases emerging and addressable opportunity expanding. Turning to slide 9, augmented reality smart glasses represents one of our most important long-term digital photonics growth opportunities.

Speaker #2: In augmented reality, we achieved key development milestones, bringing our micro light engine platform closer to volume production readiness. In AI photonics, we expanded our roadmap and moved micro photodiode arrays into full product development, further increasing our opportunity to participate in the complete optical engine in the future.

Speaker #1: Our market is still at an early stage, adoption is accelerating, and first AI-enabled smart glasses with integrated displays are now entering the market. Last quarter, we outlined our potential bill of material opportunity per device.

Speaker #2: Taken together, these wins reinforced two important trends: continued share gains in our core semiconductor business and growing customer traction in digital photonics. Let's take a closer look on slide 8.

Speaker #1: Depending on the customer architecture and component content, we estimate the potential contribution of $50 to $100 per smart glass, spanning sensing, illumination, and light engine solutions.

Speaker #2: EVAIOS is our flagship digital photonics product and the market leader in advanced forward lighting. Revenues continue to grow, and we continue to secure new design wins.

Speaker #1: On this slide, you see an Omnia projection for AI smart glasses and VR headsets, and their view, by 2030, combined unit shipments could reach approximately $60 million devices.

Aldo Kamper: Revenues continue to grow, and we continue to secure new design wins. Beyond its contribution to our ongoing share and content gains, EVIYOS is enabling a new generation of intelligent automotive lighting applications. The recently launched NIO ET9 flagship showcases the platform's advanced projection capabilities. The system enables visual communication with pedestrians and other road users, enhances situational awareness, and contributes to improved road safety. It also supports the driver in complex traffic situations through dynamic projected guidance information. Importantly, as OEMs gain experience with EVIYOS and software-defined lighting architectures, we continue to see new use cases emerging and addressable opportunity expanding. Turning to slide nine. Augmented reality smart glasses represents one of our most important long-term digital photonics growth opportunities. While the market is still at an early stage, adoption is accelerating, and first AI-enabled smart glasses with integrated displays are now entering the market.

Speaker #2: Beyond its contribution to our ongoing share and content gains, EVAIOS is enabling a new generation of intelligent automotive lighting applications. We recently launched the NIO ET9 flagship, showcasing the platform's advanced projection capabilities.

Speaker #1: Importantly, the study suggested around half of these devices could incorporate advanced display technologies, implying a market of roughly $20 million AI smart glasses with displays.

Speaker #2: The system enables visual communication with pedestrians and other road users, enhances situational awareness, and contributes to improved road safety. It also supports the driver in complex traffic situations through dynamic, projected guidance information.

Speaker #1: We believe we are uniquely positioned to lead this opportunity. Our objective is to become the leading supplier of micro LED-based light engines for the emerging AR smart glass ecosystem.

Speaker #1: We're confident in that ambition because our micro LED array technology combines superior performance, scalability, and system integration capabilities. With that, let's move to the next slide.

Speaker #2: Importantly, as OEMs gain experience with EVA I/O S and software-defined lighting architectures, we continue to see new use cases emerging and the addressable opportunity expanding. Turning to slide 9.

Speaker #1: Turning now to slide 10. Our leadership in AR light engines builds on more than a decade of innovation. The journey started with our vision to revolutionize automotive lighting through highly pixelated intelligent headlamp solutions.

Speaker #2: Augmented reality smart glasses represent one of our most important long-term digital photonics growth opportunities. Our market is still at an early stage, adoption is accelerating, and the first AI-enabled smart glasses with integrated displays are now entering the market.

Speaker #1: That vision led to the development of EVIOS, which today is the market-leading micro LED solution for advanced forward lighting. By extending the technology to red, green, and blue emitters and combining it with a unique 8-inch micro LED manufacturing platform, we're now applying the same core capabilities to the next generation of AR smart glasses.

Speaker #2: Last quarter, we outlined our potential bill of material opportunity per device. Depending on the customer architecture and component content, we estimate the potential contribution of €50 to €100 per smart glass, spanning sensing, illumination, and light engine solutions.

Aldo Kamper: Last quarter, we outlined our potential bill of material opportunity per device. Depending on the customer architecture and component content, we estimate a potential contribution of EUR 50 to EUR 100 per smart glass, spanning sensing, illumination, and light engine solutions. On this slide, you see an Omdia projection for AI smart glasses and VR headsets. In their view, by 2030, combined unit shipments could reach approximately 60 million devices. Importantly, the study suggests that around half of these devices could incorporate advanced display technologies, implying a market of roughly 20 million AI smart glasses with displays. We believe we are uniquely positioned to lead this opportunity. Our objective is to become the leading supplier of Micro LED-based light engines for the emerging AR smart glass ecosystem. We're confident in that ambition because our Micro LED array technology combines superior performance, scalability, and system integration capabilities.

Speaker #1: Our solution integrates red, green, and blue micro LED arrays with ultra-small pixel sizes and a seamless back plane, into a highly advanced light engine platform.

Speaker #2: On this slide, you see an Omnia projection for AI smart glasses and VR headsets. In their view, by 2030, combined unit shipments could reach approximately 60 million devices.

Speaker #1: This architecture delivers several key performance advantages. Up to three times higher power efficiency enabling lighter and more attractive wearable devices as the batteries get smaller, significantly higher brightness supporting outdoor use while maintaining low power consumption, and up to two times higher angular resolution enabling sharper images and a more natural viewing experience.

Speaker #2: Importantly, the study suggested around half of these devices could incorporate advanced display technologies, implying a market of roughly 20 million AI smart glasses with displays.

Speaker #2: We believe we are uniquely positioned to lead this opportunity. Our objective is to become the leading supplier of micro LED-based light engines for the emerging AR smart glass ecosystem.

Speaker #1: These capabilities are highly relevant for the consumer adoption and represent key requirements for scalable AR smart glasses platforms. Importantly, our differentiation goes beyond device performance.

Speaker #2: We're confident in that ambition because our micro LED array technology combines superior performance, scalability, and system integration capabilities. With that, let's move to the next slide.

Speaker #1: It combines proprietary micro LED technology system expertise, manufacturing know-how, and a clear product roadmap. Taken together, we believe this position is strongly to lead the emerging AR smart glasses market.

Aldo Kamper: With that, let's move to the next slide. Turning now to slide 10. Our leadership in AR light engines builds on more than a decade of innovation. The journey started with our vision to revolutionize automotive lighting through highly pixelated, intelligent headlamp solutions. That vision led to the development of EVIYOS, which today is the market-leading Micro LED solution for advanced forward lighting. By extending this technology to red, green, and blue emitters and combining it with a unique 8-inch Micro LED manufacturing platform, we're now applying the same core capabilities to the next generation of AR smart glasses. Our solution integrates red, green, and blue Micro LED arrays with ultra-small pixel sizes and a seamless backplane into a highly advanced light engine platform.

Speaker #2: Turning now to slide 10. Our leadership in AR light engines builds on more than a decade of innovation. The journey started with our vision to revolutionize automotive lighting through highly pixelated, intelligent headlamp solutions.

Speaker #1: With that, let us turn to the next slide. 11. Let me now move to another important digital photonics opportunity. We are expanding our development activities into the receive side of slow and wide optical interconnects, for AI infrastructure.

Speaker #2: That vision led to the development of EVAIOS, which today is the market-leading micro LED solution for advanced forward lighting. By extending the technology to red, green, and blue emitters and combining it with a unique 8-inch micro LED manufacturing platform, we're now applying the same core capabilities to the next generation of AR smart glasses.

Speaker #1: Our long-term ambition is clear: to participate in the complete optical engine covering both the transmit and receive functions. This vision is illustrated on the left side.

Speaker #2: Our solution integrates red, green, and blue micro-LED arrays with ultra-small pixel sizes and a seamless backplane into a highly advanced light engine platform.

Speaker #1: Over the last quarters, we have systematically expanded our development roadmap. We've initiated programs in micro emitters, micro optics, and now micro photodiode arrays, while continuing to evaluate remaining building blocks, including CMOS ASICs, advanced packaging and testing.

Speaker #2: This architecture delivers several key performance advantages: up to three times higher power efficiency, enabling lighter and more attractive wearable devices as the batteries get smaller.

Aldo Kamper: This architecture delivers several key performance advantages, up to three times higher power efficiency, enabling lighter and more attractive wearable devices as the batteries get smaller; significantly higher brightness, supporting outdoor use while maintaining low power consumption; and up to two times higher angular resolution, enabling sharper images and a more natural viewing experience. These capabilities are highly relevant for the consumer adoption and represent key requirements for scalable AR smart glasses platforms. Importantly, our differentiation goes beyond device performance. It combines proprietary Micro LED technology, system expertise, manufacturing knowhow, and a clear product roadmap. Taken together, we believe this positions us strongly to lead the emerging AR smart glasses market. With that, let us turn to the next slide 11. Let me now move to another important digital photonics opportunity. We are expanding our development activities into the receive side of slow-and-wide optical interconnects for AI infrastructure.

Speaker #1: Step by step, we are broadening our technology footprint and increasing our opportunity to participate in a larger share of the optical engine value. With that, let us move to the next slide.

Speaker #2: Significantly higher brightness, supporting outdoor use while maintaining low power consumption, and up to two times higher angular resolution, enabling sharper images and a more natural viewing experience.

Speaker #1: Now, slide 12. Let me highlight another interesting digital photonics opportunity in multi-zone time-of-flight sensing. Our multi-zone time-of-flight platform is setting a new benchmark for high-resolution depth sensing, with up to 48 by 32 pixels.

Speaker #2: These capabilities are highly relevant for consumer adoption and represent key requirements for scalable AR smart glasses platforms. Importantly, our differentiation goes beyond device performance.

Speaker #1: This performance makes it particularly well-suited for robotics applications. Already secure design wins in-house of robotics, including autonomous lawn mowing systems, as well as advanced four-legged robots.

Speaker #2: It combines proprietary micro LED technology, system expertise, manufacturing know-how, and a clear product roadmap. Taken together, we believe this positions us strongly to lead the emerging AR smart glasses market.

Speaker #1: The higher depth resolution enables safer and more reliable autonomous navigation. The same performance advantages are relevant to smartphones, where more accurate depth sensing supports enhanced imaging capabilities.

Speaker #2: With that, let's just turn to the next slide, slide 11. Let me now move to another important digital photonics opportunity. We are expanding our development activities into the receive side of slow and wide optical interconnects for AI infrastructure.

Speaker #1: Importantly, we've now secured our first design wins in both robotics and smartphones, demonstrating the versatility of the new platform and validating our technology leadership.

Speaker #2: Our long-term ambition is clear: to participate in the complete optical engine, covering both the transmit and receive functions. This vision is illustrated on the left side.

Aldo Kamper: Our long-term ambition is clear: to participate in the complete optical engine covering both the transmit and receive functions. This vision is illustrated on the left side. Over the last quarters, we have systematically expanded our development roadmap. We've initiated programs in micro emitters, micro optics, and now micro photodiode arrays, while continuing to evaluate the remaining building blocks, including CMOS ASICs, advanced packaging, and testing. Step by step, we are broadening our technology footprint and increasing our opportunity to participate in a larger share of the optical lending value. With that, let us move to the next slide. Now on slide 12. Let me highlight another interesting digital photonics opportunity, multi-zone ToF sensing. Our multi-zone ToF platform is setting a new benchmark for high-resolution depth sensing with up to 48 by 32 pixels. Its performance makes it particularly well-suited for robotics applications.

Speaker #1: With that, let me hand over to Rainer for a deeper look in the financials.

Speaker #2: So we start with free cash flow. There was a minus on that $90 million and I think I announced last time that we will be reducing factoring so the operating cash flow was at minus 77, and part of that was because we were built up working capital ahead of the smartphone and lighting season.

Speaker #2: Over the last quarters, we've systematically expanded our development roadmap. We've initiated programs in micro emitters and micro optics, and now micro photodiode arrays, while continuing to evaluate the remaining building blocks, including CMOS ASICs, advanced packaging, and testing.

Speaker #2: Step by step, we are broadening our technology footprint and increasing our opportunity to participate in a larger share of the optical engine value. With that, let us move to the next slide.

Speaker #2: We had $40 million reduction of factoring, we had the annual bonus payouts, as well as net interest payments of close to $40 million. Capex remained fully in line with our full-year guidance of approximately 8% of revenue.

Speaker #2: Now, on slide 12, let me highlight another interesting digital photonics opportunity in multi-zone time-of-flight sensing. Our multi-zone time-of-flight platform is setting a new benchmark for high-resolution depth sensing, with up to 48 by 32 pixels.

Speaker #2: Now, let's have a look at simplify on page 14. Simplify is designed to reshape our operating model and deliver $200 million of additional annual savings by 2028.

Speaker #2: This performance makes it particularly well-suited for robotics applications. Or you secure design wins in-house with robotics, including autonomous lawn mowing systems, as well as advanced four-legged robots.

Aldo Kamper: Already secure design wins in household robotics, including autonomous lawn mowing systems, as well as advanced four-legged robots. The higher depth resolution enables safer and more reliable autonomous navigation. The same performance advantages are relevant to smartphones, where more accurate depth-sensing support enhanced imaging capabilities. Importantly, we have now secured our first design wins in both robotics and smartphones, demonstrating the versatility of the new platform and validating our technology leadership. With that, let me hand over to Rainer for a deeper look in the financials.

Speaker #2: Cost, speed, and agility are our guiding principles. Implementation is progressing as planned, and we have already realized approximately $10 million of annualized savings. An important milestone in the continued execution of the program was reaching an agreement with the German workers' council.

Speaker #2: The higher depth resolution enables safer and more reliable autonomous navigation. The same performance advantages are relevant to smartphones, where more accurate depth sensing supports enhanced imaging capabilities.

Speaker #2: Importantly, we've now secured our first design wins in both robotics and smartphones, demonstrating the versatility of the new platform and validating our technology leadership.

Speaker #2: By year end 2026, we target around $30 million, of realized savings, and by end of 2027, then we expect to have delivered approximately half of the total program, or around $100 million of annualized savings.

Speaker #2: With that, let me hand over to Rainer for a deeper look into the financials.

Speaker #3: So we start with free cash flow. There was a minus of €90 million, and I think I announced last time that we will be reducing factoring.

Rainer Irle: We start with free cash flow. That was at EUR -90 million. I think I announced last time that we will be reducing factoring. The operating cash flow was at EUR -77 million, and part of that was because we built up working capital ahead of the smartphone and lighting season. We had EUR 40 million reduction of factoring. We had the annual bonus payout, as well as net interest payments of close to EUR 40 million. CapEx remained fully in line with our full-year guidance of approximately 8% of revenue. Now let's have a look at Simplify on page 14. Simplify is designed to reshape our operating model and deliver EUR 200 million additional annual savings by 2028. Cost, speed, and agility are our guiding principle. Implementation is progressing as planned, and we have already realized approximately EUR 10 million annualized savings.

Speaker #2: The program remains an important lever for improving competitiveness, increasing agility, and supporting future margin expansion. Now, let's look at liquidity and capital structure on slide 15.

Speaker #3: So the operating cash flow was at minus 77, and part of that was because we built up working capital ahead of the smartphone and lighting seasons.

Speaker #2: We made significant progress, as you know, on our balance sheet optimization in the second quarter. We successfully replaced $1 billion of senior nodes due 32 as a coupon at 7 at the quarter.

Speaker #3: We had a €40 million reduction in factoring. We had the annual bonus payouts, as well as net interest payments of close to €40 million.

Speaker #2: The transaction was very well received by investors. Demand exceeded the initial offering by six times, allowing us to increase the issue size to $1 billion.

Speaker #3: Capex remained fully in line with our full-year guidance of approximately 8% of revenue. Now, let's have a look at Simplify on page 14. Simplify is designed to reshape our operating model and deliver €200 million of additional annual savings by 2028.

Speaker #2: We used the proceeds to fully redeem the 12 and a quarter USD senior nodes in 2029 and partially redeemed the 10 and a half year senior nodes due 2029.

Speaker #2: Following these transactions, $725 million of the 2029 senior nodes remain outstanding. And we've repurchased $127 million of our 2027 convertible nodes through bilateral transactions at a price well below par.

Speaker #3: Cost, speed, and agility are our guiding principles. Implementation is progressing as planned, and we have already realized approximately €10 million of annualized savings.

Speaker #3: An important milestone in the continued execution of the program was reaching an agreement with the German workers' council. By year-end 2026, we target around €30 million of realized savings, and by the end of 2027, we expect to have delivered approximately half of the total program, or around €100 million of annualized savings.

Rainer Irle: An important milestone in the continued execution of the program was reaching an agreement with the German Works Council. By year-end 2026, we target around EUR 30 million of realized savings. By end of 2027, we expect to have delivered approximately half of the total program, or around EUR 100 million of annualized savings. The program remains an important lever for improving competitiveness, increasing agility, and supporting future margin expansion. Let's look at liquidity and capital structure on slide 15. We made significant progress, as you know, on our balance sheet optimization in Q2. We successfully placed EUR 1 billion senior notes due 2032 at a coupon of 7.25%. The transaction was very well received by investors. Demand exceeded the initial offering by six times, allowing us to increase the issue size to EUR 1 billion.

Speaker #2: After these transactions, we maintained a strong liquidity position. At quarter end, cash amounted to approximately $1 billion. Including the revolver, total liquidity stood at approximately $1.5 billion.

Speaker #2: Now, following the closing of the non-optic sensor business, divestment to Infineon, a day later, on July 1st, cash increased to approximately $1.6 billion, and total liquidity to approximately $2.1 billion including our recently extended revolver.

Speaker #3: The program remains an important lever for improving competitiveness, increasing agility, and supporting future margin expansion. Now, let's look at liquidity and capital structure on slide 15.

Speaker #3: We made significant progress, as you know, on our balance sheet optimization in the second quarter. We successfully replaced €1 billion of senior notes due '32 with a coupon of 7% at the quarter.

Speaker #2: The outstanding balance of the convertible nodes has been reduced to approximately $430 million. We have also updated the maturity profile to reflect our current expectation that any potential tendering of the remaining awesome shares is more likely now to occur in 2027, potentially during the first half of the year.

Speaker #3: The transaction was very well received by investors. Demand exceeded the initial offering by six times, allowing us to increase the issue size to €1 billion.

Speaker #3: We used the proceeds to fully redeem the 12 and a quarter US dollar senior nodes in 2029 and partially redeemed the 10 and a half euro senior nodes due 2029.

Rainer Irle: We used the proceeds to fully redeem the 12.25 US dollar senior notes in 2029 and partially redeem the 10.5-year senior notes due 2029. Following these transactions, EUR 725 million of the 2029 senior notes remain outstanding. We repurchased EUR 127 million of our 2027 convertible notes through bilateral transactions at a price well below par. After these transactions, we maintained a strong liquidity position. At quarter end, cash amounted to approximately EUR 1 billion. Including the revolver, total liquidity stood at approximately EUR 1.5 billion. Following the closing of the Non-Optic Sensor business divestment to Infineon a day later on 1 July, cash increased to approximately EUR 1.6 billion and total liquidity to approximately EUR 2.1 billion, including our recently extended revolver. The outstanding balance of the convertible notes has been reduced to approximately EUR 430 million.

Speaker #2: The liability associated with the Q2 sale and leaseback remains largely unchanged with small quarterly accruals, broadly offset by the movements in the currency. Basket.

Speaker #3: Following these transactions, €725 million of the 2029 senior notes remain outstanding. And we've repurchased €127 million of our 2027 convertible notes through bilateral transactions at a price well below par.

Speaker #2: Overall, we have meaningfully strengthened our capital structure. Reduced financing costs and increased financial flexibility. And with that, let us have a look at a closer look at the coverage of our upcoming maturities on slide 16.

Speaker #3: After these transactions, we maintained a strong liquidity position. At quarter end, cash amounted to approximately €1 billion. Including the revolver, total liquidity stood at approximately €1.5 billion.

Speaker #2: July 1st, we received the $570 million from Infineon upon closing as a result, we currently hold $1.6 billion cash. This fully covers all foreseeable near-term funding requirements.

Speaker #3: Now, following the closing of the non-optic sensor business divestment to Infineon, a day later, on July 1st, cash increased to approximately €1.6 billion, and total liquidity to approximately €2.1 billion, including our recently extended revolver.

Speaker #2: And that is the remaining $433 million of the outstanding 2027 converts. Following the closing of the divestment, we have $120 days to make a mandatory par offer, relating to the guarantor assets.

Speaker #2: The offer will be in a range between $120 and $150 million. Second, the expected transition effects in 2026, including lower adjusted EBITDA from the divested business, general cost transformation expenses related to simplify program, the repayment of approximately $100 million of customer prepayments, and the planned reduction of factoring of the order of $100 million.

Speaker #3: The outstanding balance of the convertible notes has been reduced to approximately €430 million. We have also updated the maturity profile to reflect our current expectation that any potential tendering of the remaining Osram shares is now more likely to occur in 2027, potentially during the first half of the year.

Rainer Irle: We have also updated the maturity profile to reflect our current expectation that any potential tendering of the remaining OSRAM shares is more likely now to occur in 2027, potentially during H1. The liability associated with the Kulim 2 sale and leaseback remains largely unchanged, with small quarterly accruals broadly offset by the movements in the currency basket. Overall, we have meaningfully strengthened our capital structure, reduced financing costs, and increased financial flexibility. With that, let us have a closer look at the coverage of our upcoming maturities on slide 16. 1 July, we received the EUR 570 million from Infineon upon closing. As a result, we currently hold EUR 1.6 billion cash. This fully covers all foreseeable near-term funding requirements, and that is the remaining EUR 433 million of the outstanding 2027 converts.

Speaker #3: The liability associated with the Q2 sale and leaseback remains largely unchanged, with small quarterly accruals broadly offset by the movements in the currency basket.

Speaker #2: Excluding disposal proceeds, we currently expect free cash flow to remain more than $100 million negative in 2026. Excluding the disposal. However, we continue to expect a substantial improvement in free cash flow in 2027.

Speaker #3: Overall, we have meaningfully strengthened our capital structure, reduced financing costs, and increased financial flexibility. And with that, let us take a closer look at the coverage of our upcoming maturities on slide 16.

Speaker #2: And assuming business trends remain broadly consistent, we see a clear path to a positive free cash flow. Excluding, again, any future disposal proceeds, which are not planned.

Speaker #3: On July 1st, we received €570 million from Infineon upon closing. As a result, we currently hold €1.6 billion in cash. This fully covers all foreseeable near-term funding requirements.

Speaker #2: Third, the expected settlement of the remaining awesome minority shares following a final court decision. For planning purposes, we currently assume that this will occur in the first half of 2027.

Speaker #3: And that is the remaining €433 million of the outstanding 2027 converts. Following the closing of the divestment, we have 120 days to make a mandatory par offer relating to the guarantor assets.

Speaker #2: Even after covering all these items, we expect to retain a meaningful cash buffer. Let me reiterate the key point. All foreseeable near-term funding requirements are fully covered by existing liquidity.

Rainer Irle: Following the closing of the divestment, we have 120 days to make a mandatory offer relating to the guarantor assets. The offer will be in the range between EUR 120 to 150 million. Second, the expected transition effects in 2026, including lower adjusted EBITDA from the divested business, stranded cost transformation expenses related to Simplify program, the repayment of approximately $100 million of customer prepayments, and the planned reduction of factoring of the order of EUR 100 million. Excluding disposal proceeds, we currently expect free cash flow to remain more than EUR -100 million in 2026, excluding the disposal. However, we continue to expect a substantial improvement in free cash flow in 2027. Assuming business trends remain broadly consistent, we see a clear path to a positive free cash flow, excluding, again, any future disposal proceeds which are not planned.

Speaker #3: The offer will be an arrangement between 120 and 150 million euro. Second, the expected transition effects in 2026, including lower adjusted EBITDA from the divested business, standard cost transformation expenses related to simplify program, the repayment of approximately 100 million US dollar of customer prepayments, and the planned reduction of factoring of the order of 100 million.

Speaker #2: This allows us to remain focused on further optimizing the cost and maturity profile of the remaining 2029 senior nodes. We'll keep you updated on our progress.

Speaker #2: Now, on the outlook for the third quarter. Turning to slide 17. We expect revenues of $770 to $870 million and adjusted EBITDA around $16 plus minus $1.5 percentage points based on EUR/USD exchange rate of 1.15.

Speaker #3: Excluding disposal proceeds, we currently expect free cash flow to remain more than €100 million negative in 2026, excluding the disposal. However, we continue to expect a substantial improvement in free cash flow in 2027.

Speaker #2: In CMEs, we expect the underlying business to continue growing both seasonally and structurally. However, and please have a look at the right side following the divestment, the non-optical sensor business reported revenue will be lower, as we will know record only a manufacturing service margin from Infineon, which is obviously much lower, rather than the full revenue contribution.

Speaker #3: And, assuming business trends remain broadly consistent, we see a clear path to positive free cash flow—excluding, again, any future disposal proceeds, which are not planned.

Speaker #3: Third, the expected settlement of the remaining Austrian minority shares following a final court decision. For planning purposes, we currently assume that this will occur in the first half of 2027.

Rainer Irle: Third, the expected settlement of the remaining OSRAM minority shares following a final court decision. For planning purposes, we currently assume that this will occur in the H1 2027. Even after covering all these items, we expect to retain a meaningful cash buffer. Let me reiterate the key point. All foreseeable near-term funding requirements are fully covered by existing liquidity. This allows us to remain focused on further optimizing the cost and maturity profile of the remaining 2029 EUR senior notes. We'll keep you updated on our progress. Now on the outlook for the Q3. Turning to slide 17. We expect revenues of EUR 770 to 870 million, and adjusted EBITDA around 16% ± 1.5 percentage points based on the EUR-US dollar exchange rate of 115. In semis, we expect the underlying business to continue growing both seasonally and structurally.

Speaker #2: This will reduce quarterly revenue by approximately $40 million. And EBITDA by approximately $1.5 percent. This is illustrated on the diagram on the right. Order intake remains healthy and our book-to-bill ratio supports a solid third quarter.

Speaker #3: Even after covering all these items, we expect to retain a meaningful cash buffer. Let me reiterate the key point: all foreseeable near-term funding requirements are fully covered by existing liquidity.

Speaker #2: In lens and systems, we expect the traditional automotive aftermarket business to show its usual seasonal recovery. And for the full year 2026 outlook, that remains broadly unchanged: the revenue modestly lowered due to the portfolio divestments and foreign exchange effects, adjusted EBITDA somewhat lower than last year, reflecting the divestment stranded cost pressure method prices in other transition-related effects.

Speaker #3: This allows us to remain focused on further optimizing the cost and maturity profile of the remaining €29 million senior notes. We'll keep you updated on our progress.

Speaker #3: Now, on the outlook for the third quarter, turning to slide 17. We expect revenues of €770 to €870 million and adjusted EBITDA around 16%, plus or minus 1.5 percentage points, based on the euro-US dollar exchange rate of 1.15.

Speaker #2: And the net results they are expected to be positive in the high double-digit million euro territory, supported by a high gain from the sale of the non-optical sensor business.

Speaker #3: In CMEs, we expect the underlying business to continue growing both seasonally and structurally. However—and please have a look at the right side following the divestment—the non-optical sensor business reported revenue will be lower, as we will now record only a manufacturing service margin from Infineon, which is obviously much lower, rather than the full revenue contribution.

Rainer Irle: Please have a look at the right side. Following the divestment of the non-optical sensor business, reported revenue will be lower as we will now record only a manufacturing source margin from Infineon, which is obviously much lower, rather than the full revenue contribution. This will reduce quarterly revenue by approximately EUR 40 million and EBITDA by approximately 1.5%. This is illustrated on the diagram on the right. Order intake remains healthy, and our book-to-bill ratio supports a solid Q3. In Lamps & Systems, we expect the traditional automotive aftermarket business to show its usual seasonal recovery. For the full year 2026 outlook, that remains broadly unchanged. The revenue modestly lower due to the portfolio divestments and foreign exchange effects. Adjusted EBITDA is somewhat lower than last year, reflecting the divestments and the cost pressure metal prices and other transition-related effects.

Speaker #2: So net result positive. And looking ahead to 2027, we continue to see a clear path to a positive free cash flow, excluding any future divestment proceeds.

Speaker #2: Our core CME business is growing our digital photonics opportunities are gaining traction, and our capital structure is significantly stronger than it was a year ago.

Speaker #3: This will reduce quarterly revenue by approximately €40 million, and EBITDA by approximately one and a half percent. This is illustrated on the diagram on the right.

Speaker #2: And with that, let me hand back to Aldo for some final remarks.

Speaker #1: you, Rainer. And let me summarize the key messages from today's call. I'm on slide 18. In Q2, we delivered revenue profitability at the high end of our guidance range.

Speaker #3: Order intake remains healthy, and our book-to-bill ratio supports a solid third quarter. In Lamps and Systems, we expect the traditional automotive aftermarket business to show its usual seasonal recovery.

Speaker #1: Our core semiconductor portfolio grew 13% year-on-year, or like-for-like basis. We secured more than $1.6 billion of new semiconductor business, reflecting continued market share and content gain.

Speaker #3: And for the full year 2026 outlook, that remains broadly unchanged. The revenue is modestly lowered due to the portfolio divestments and foreign exchange effects. Adjusted EBITDA is somewhat lower than last year, reflecting the divestment, stranded cost pressure, market prices, and other transition-related effects.

Speaker #1: In digital photonics, we aligned organization around key growth themes through dedicated business lines, accelerating execution and scalability. We achieved important development milestones for the micro LED-based light engines for AI-enabled smart glasses, bringing the platform closer to mass production readiness.

Speaker #3: And the net results—they are expected to be positive, in the high double-digit million euro territory, supported by a high gain from the sale of the non-optical sensor business.

Rainer Irle: The net results, they are expected to be positive in the high double-digit EUR million territory, supported by a high gain from the sale of the non-optical sensor business. Net result positive. Looking ahead to 2027, we continue to see a clear path to positive free cash flow, excluding any future divestment proceeds. Our core semi business is growing, our digital photonics opportunities are gaining traction, and our capital structure is significantly stronger than it was a year ago. With that, let me hand back to Aldo for some final remarks.

Speaker #1: We expanded our AI photonics roadmap by adding micro photodiode arrays to our optical engine development activities. And we secured the first design wins for our high-resolution multi-zone TOF platform in robotics and smartphones.

Speaker #3: So, net result positive. And, looking ahead to 2027, we continue to see a clear path to positive free cash flow, excluding any future divestment proceeds.

Speaker #1: Together, these milestones demonstrate continued progress in building the next generation of digital photonic growth opportunities. And we executed at the same time our balance sheet improvements as intended.

Speaker #3: Our core CME business is growing, our digital photonics opportunities are gaining traction, and our capital structure is significantly stronger than it was a year ago.

Speaker #1: We completed the divestment of our non-optical sensor business with Infineon and received the proceeds. We signed the divestment of our CMOS imaging business to Indie Semiconductor.

Speaker #1: We successfully placed $1 billion of new senior nodes at a coupon of $7.25%. And we redeemed the expensive USD senior nodes and parted the euro senior nodes U29, reducing annual interest expense by approximately $40 million.

Speaker #3: And with that, let me hand back to Aldo for some final remarks.

Speaker #1: Thank you, Rainer. Let me summarize the key messages from today's call. I'm on slide 18. In Q2, we delivered revenue and profitability at the high end of our guidance range.

Aldo Kamper: Thank you, Rainer. Let me summarize the key messages from today's call. I'm on slide 18. In Q2, we delivered revenue and profitability at the high end of our guidance range. Our core semiconductor portfolio grew 13% year-on-year on a like-for-like basis. We secured more than EUR 1.6 billion of new semiconductor business, reflecting continued market share and content gain. In digital photonics, we aligned the organization around key growth teams through dedicated business lines, accelerating execution and scalability. We achieved important development milestones for the Micro LED-based light engines for AI-enabled smart glasses, bringing the platform closer to mass production readiness. We expanded our AI photonics roadmap by adding micro photodiode arrays to our optical engine development activities, and we secured the first design win for a high-resolution multi-zone ToF platform in robotics and smartphones.

Speaker #1: Our core semiconductor portfolio grew 13% year-on-year on a like-for-like basis. We secured more than €1.6 billion of new semiconductor business, reflecting continued market share and content gains.

Speaker #1: Before we continue with the Q&A, I would like to briefly note that, as announced last week, the supervisory board has extended my contract to 2031.

Speaker #1: I appreciate the first place to me and the continued support from our investors and stakeholders. Together, we've built a strong foundation and I look forward to executing the next phase of our strategy and capturing the opportunities ahead.

Speaker #1: In Digital Photonics, we aligned the organization around key growth themes through dedicated business lines, accelerating execution and scalability. We achieved important development milestones for the micro-LED-based light engines for AI-enabled smart glasses, bringing the platform closer to mass production readiness.

Speaker #1: With that, we're happy to take your questions now.

Speaker #3: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the telephone.

Speaker #1: We expanded our AI photonics roadmap by adding micro-photodiode arrays to our optical engine development activities, and we secured the first design wins for our high-resolution, multi-zone TOF platform in robotics and smartphones.

Speaker #3: You'll hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.

Speaker #1: Together, these milestones demonstrate continued progress in building the next generation of digital photonic growth opportunities. At the same time, we executed our balance sheet improvements as intended.

Speaker #3: In the interest of time, please limit yourself to two questions. If we have time, we are happy to take further questions. Anyone who has a question may press star and one at this time.

Aldo Kamper: Together, these milestones demonstrate continued progress in building the next generation of digital photonic growth opportunities. We executed at the same time our balance sheet improvements as intended. Completed the divestment of our non-optical sensor business with Infineon and received the proceeds. Designed the divestment of our CMOS imaging business to Indie Semiconductor. We successfully placed 1 billion of new senior notes at a coupon of 7.25%. We redeemed the expensive US dollar senior notes and part of the EUR senior notes due 2029, reducing annual interest expense by approximately EUR 40 million. Before we continue with the Q&A, I would like to briefly note that as announced last week, the supervisory board has extended my contract to 2031. I appreciate the trust placed in me and the continued support from our investors and stakeholders.

Speaker #1: We completed the divestment of our non-optical sensor business with Infineon and received the proceeds. We signed the divestment of our CMOS imaging business to Indie Semiconductor.

Speaker #3: And you have the first question coming from Janardan Menon from Jefferies. Please go ahead.

Speaker #4: Hi, good morning. Thanks for taking my questions. I've got two. One is on the smart glass micro LED projector. You've said you have achieved milestones towards mass production.

Speaker #1: We successfully placed €1 billion of new senior notes at a coupon of 7.25%. We also redeemed the expensive US dollar senior notes and partly the euro senior notes U29, reducing annual interest expense by approximately €40 million.

Speaker #4: I was just wondering, how many are there further milestones that are still to be achieved on the smart glass side, both on your part as well as with your customer?

Speaker #1: Before we continue with the Q&A, I would like to briefly note that, as announced last week, the Supervisory Board has extended my contract to 2031.

Speaker #1: I appreciate the trust placed in me and the continued support from our investors and stakeholders. Together, we've built a strong foundation, and I look forward to executing the next phase of our strategy and capturing the opportunities ahead.

Speaker #4: Or are we sort of reaching the end of the development process where if all is well, we can move into commercial production? And then on the second question is on the optical opportunity.

Aldo Kamper: Together, we have built a strong foundation. I look forward to executing the next phase of our strategy and capturing the opportunities ahead. With that, we are happy to take your questions now.

Speaker #1: With that, we're happy to take your questions now.

Speaker #2: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star one on the telephone.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their telephone. You will be returned to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. In the interest of time, please limit yourself to two questions. If we have time, we are happy to take further questions. Anyone who has a question may press star and one at this time. We have the first question coming from Jean-Adam Migneault from Jefferies. Please go ahead.

Speaker #4: You started development work on the photodiode array as you had said you may do in your previous call. I'm just wondering, regarding the revenue opportunity from this, is it significantly more than just the emitter side?

Speaker #2: You'll be returned to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two.

Speaker #2: In the interest of time, please limit yourself to two questions. If we have time, we are happy to take further questions. Anyone who has a question may press star and one at this time.

Speaker #4: I mean, will it be 20% or 50% higher? Any kind of indication? I know it probably gets covered in the triple-digit million euro number that you've already indicated, but just how much it enhances it.

Speaker #2: And you have the first question coming from Jonathan Minault from Jefferies. Please go ahead.

Speaker #4: And is there an opportunity to sell this in your initial development with your first partner that you announced a few months ago? Thanks.

Speaker #4: Hi, good morning. Thanks for taking my questions. I've got two. One is on the smart glass microLED projector. You've said you have achieved milestones towards mass production.

Jean-Adam Migneault: Hi. Good morning. Thanks for taking my questions. I have got two. One is on the smart glass Micro LED projector. You have said you have achieved milestones towards mass production. I am just wondering, are there further milestones that are still to be achieved on the smart glass side, both on your part as well as with your customer? Or are we sort of reaching the end of the development process, where, if all is well, we can move into commercial production? Then the second question is on the optical opportunity. You started development work on the photodiode array, as you had said you may do in your previous call. I am just wondering, regarding the revenue opportunity from this, is it significantly more than just the emitter side? Will it be 20% or 50% higher? Any kind of indication?

Janardan Menon: Hi. Good morning. Thanks for taking my questions. I have got two. One is on the smart glass Micro LED projector. You have said you have achieved milestones towards mass production. I am just wondering, are there further milestones that are still to be achieved on the smart glass side, both on your part as well as with your customer? Or are we sort of reaching the end of the development process, where, if all is well, we can move into commercial production? Then the second question is on the optical opportunity. You started development work on the photodiode array, as you had said you may do in your previous call. I am just wondering, regarding the revenue opportunity from this, is it significantly more than just the emitter side? Will it be 20% or 50% higher? Any kind of indication?

Speaker #1: Yeah, thanks, Janardan, for those questions. Let me perhaps start with the second one. You're right. I mean, the photodiode is not at the same value as the micro LED array but at the same time, it is, I think, a very important part also towards our optical engine ambitions.

Speaker #4: I was just wondering, how many further milestones are still to be achieved on the smart glass side, both on your part as well as with your customer?

Speaker #1: We feel there's a very nice opportunity for us as a company that combines Q5 and CMOS capabilities to do more than just a component, but to integrate those components into a larger subsystem that then can be used by our customers.

Speaker #4: Or are we sort of reaching the end of the development process where, if all is well, we can move into commercial production? And then, on the second question, it is on the optical opportunity.

Speaker #1: And to optimize the photodiode towards the emitter, we feel there's a natural extension and we are looking at further extensions as we go. So yes, it is still a nice additional revenue, but it's also especially a way towards higher system integration on our side.

Speaker #4: You've started development work on the photodiode array, as you had said you may do in your previous call. I'm just wondering, regarding the revenue opportunity from this—is it significantly more than just the emitter side?

Speaker #1: And with that, a more stickier approach. On the smart glass topic, we are progressing well. There's still work to be done, both on our side as well as on the customer side, but things are progressing well.

Speaker #4: I mean, will it be 20% or 50% higher? Any kind of indication? I know it probably gets covered in the triple-digit million-euro number that you've already indicated, but just how much does it enhance it?

Jean-Adam Migneault: I know it probably gets covered in the triple-digit million EUR number that you've already indicated, but just how much it enhances it. Is there an opportunity to sell this in your initial development with your first partner that you announced a few months ago? Thanks.

Janardan Menon: I know it probably gets covered in the triple-digit million EUR number that you've already indicated, but just how much it enhances it. Is there an opportunity to sell this in your initial development with your first partner that you announced a few months ago? Thanks.

Speaker #1: And as we said already in the last call, I mean, if IOS is kind of the technology of today, the opportunity for tomorrow is in smart glass.

Speaker #4: And is there an opportunity to sell this in your initial development with your first partner that you announced a few months ago? Thanks.

Speaker #1: The opportunity for the day after tomorrow is in the data center space. So yeah, we continue to work on our roadmap here and are making progress to mass production here.

Speaker #1: Yeah, thanks, Jonathan, for those questions. Let me perhaps start with the second one. You're right. I mean, the photodiode is not at the same value as the micro LED array but at the same time, it is, I think, a very important part also towards our optical engine ambitions.

Aldo Kamper: Thanks, Chinarad, for those questions. Let me perhaps start with the second one. You're right. The photodiode is not of the same value as the Micro LED array. At the same time, it is, I think, a very important part also towards our optical engine ambitions. We feel there's a very nice opportunity for us as a company that combines III-V and CMOS capabilities to do more than just the components, but to integrate those components into a larger subsystem that can be used by our customers. To optimize the photodiodes towards the emitter, we feel is a natural extension, and we are looking at further extensions as we go. Yes, it is still a nice additional revenue. It's also especially a way towards higher system integration on our side, and with that, a more stickier approach.

Aldo Kamper: Thanks, Janardan, for those questions. Let me perhaps start with the second one. You're right. The photodiode is not of the same value as the Micro LED array. At the same time, it is, I think, a very important part also towards our optical engine ambitions. We feel there's a very nice opportunity for us as a company that combines III-V and CMOS capabilities to do more than just the components, but to integrate those components into a larger subsystem that can be used by our customers. To optimize the photodiodes towards the emitter, we feel is a natural extension, and we are looking at further extensions as we go. Yes, it is still a nice additional revenue. It's also especially a way towards higher system integration on our side, and with that, a more stickier approach.

Speaker #4: And on the Omdia numbers, that you showed on the AI smart glass, do you think the entire display part of that forecast can be captured by your micro LED solution or will the micro LED be more sort of on the high end of that display part of the market in some of the others of the captured by LCOS or micro OLED or other display technologies?

Speaker #1: We feel there's a very nice opportunity for us as a company that combines III-V and CMOS capabilities to do more than just a component, but to integrate those components into a larger subsystem that then can be used by our customers.

Speaker #1: And to optimize the photodiode toward the emitter, we feel there's a natural extension, and we are looking at further extensions as we go. So yes, it is still a nice additional revenue, but it's also especially a way toward higher system integration on our side.

Speaker #1: Well, yes, you're right. I mean, there are some alternatives, but I think the technology that we're developing is quite superior. I mean, in terms of picture quality and energy efficiency and brightness.

Speaker #1: So I do expect that this goes pretty far into this market. And this micro LED is the, in my mind, the winning technology for this application.

Speaker #1: And with that, a stickier approach. On the smart glass topic, we are progressing well. There's still work to be done, both on our side as well as on the customer side, but things are progressing well.

Aldo Kamper: On the smart glass topic, we are progressing well. There's still work to be done, both on our side as well as on the customer side. Things are progressing well. As we said already in the last call, device is kind of the technology of today. The opportunity for tomorrow is in smart glass. The opportunity for the day after tomorrow is in the data center space. We continue to work on our roadmap here and are making progress to mass production here.

Speaker #4: Understood. Thank you so much.

Speaker #1: Sure. Welcome.

Speaker #1: And as we said already in the last call, I mean, if iOS is kind of the technology of today, the opportunities for tomorrow are in smart glass.

Speaker #3: The next question comes from Sebastien Sztabowicz from Kepler Chevreux. Please go ahead.

Speaker #2: Yeah, hi everyone. Thanks for taking my question. On a pretty casual side, you had again a quite substantial cash burn in Q2. Where do you see the cash burn for the full year 2026, including net interest and excluding the development on a business?

Speaker #1: The opportunity the day after tomorrow is in the data center space. So, yeah, we continue to work on our roadmap here and are making progress toward mass production here.

Jean-Adam Migneault: On the Omdia numbers that you showed on the AI smart glass, do you think the display part of that forecast can be captured by your Micro LED solution? Or will the Micro LED be more sort of on the high end of that display part of the market, and some of the others will be captured by LCOS or Micro OLED or other display technologies?

Janardan Menon: On the Omdia numbers that you showed on the AI smart glass, do you think the display part of that forecast can be captured by your Micro LED solution? Or will the Micro LED be more sort of on the high end of that display part of the market, and some of the others will be captured by LCOS or Micro OLED or other display technologies?

Speaker #2: And attached to that, on a capex front, you forecast 8% of sales for this year. Is it a run rate that we should expect for 2027 onward?

Speaker #2: And the second question is linked to the smart glasses again. When do you expect to record the first significant revenue? Because it seems you have progressed well.

Speaker #2: Is it something for 2027 or is it too early? Is more 2028 and onward? Thank you.

Aldo Kamper: Well, yes, you're right. There are some alternatives, but I think the technology we are developing is quite superior in terms of picture quality, energy efficiency, and brightness. I do expect that this goes pretty broad into this market. This Micro LED is, in my mind, the winning technology for this application.

Speaker #1: Yeah, Sebastian. Starting with the pre-cash flow. So I mean, this year excluding the proceeds from the divestment, I guess it will be negative a bit more than 300 million.

Speaker #1: So I do expect that this goes pretty far into this market. And this micro LED is, in my mind, the winning technology for this application.

Speaker #1: And that is really why we are putting everything into this year, right? I mean, we're reducing the factoring by a good 100 million. We are repaying the 100 million customer payment.

Speaker #4: Understood. Thank you so much.

Jean-Adam Migneault: Understood. Thank you so much.

Janardan Menon: Understood. Thank you so much.

Speaker #1: Sure. Welcome.

Aldo Kamper: Sure. Welcome.

Speaker #1: We're paying a lot of the restructuring expenses and everything else that should be paid to clean up, to have a proper start into next year.

Speaker #2: The next question comes from Sebastian Sabovic from Kepler Chevreux. Please go ahead.

Operator: The next question comes from Sebastien Tabovik from Kepler Cheuvreux. Please go ahead.

Speaker #3: Yeah, hi everyone. Thanks for taking my question. On a pretty casual note, you had, again, quite substantial cash burn in Q2. Where do you see the cash burn for the full year 2026, including net interest and excluding the development on the business?

Sebastien Tabovik: Hi, everyone. Thanks for taking my question. On the free cash flow side, you had again, quite substantial cash burn in Q2. Where do you see the cash burn for the full year 2026, including net interest and excluding the divestment on the business? Attached to that, on the CapEx front, you forecast 8% of sales for this year. Is it a run rate that we should expect for 2027 onwards? A second question is linked to the smart glasses again. When do you expect to record the first significant revenue? Because it seems you have progressed well. Is it something for 2027 or is it more 2028 and onward? Thank you.

Sébastien Sztabowicz: Hi, everyone. Thanks for taking my question. On the free cash flow side, you had again, quite substantial cash burn in Q2. Where do you see the cash burn for the full year 2026, including net interest and excluding the divestment on the business? Attached to that, on the CapEx front, you forecast 8% of sales for this year. Is it a run rate that we should expect for 2027 onwards? A second question is linked to the smart glasses again. When do you expect to record the first significant revenue? Because it seems you have progressed well. Is it something for 2027 or is it more 2028 and onward? Thank you.

Speaker #1: Obviously, the free cash flow, including the disposal proceeds, will be significantly positive this year. Now, going into next year, capex, yeah, capex might be a bit higher, certainly.

Speaker #3: And attached to that, on a CapEx front, you forecast 8% of sales for this year. Is that a run rate that we should expect for 2027 onward?

Speaker #1: For the new opportunities, but it's not that we pay all of it. So for, I think, other Jabot, we are sharing a lot of the cost, both on the R&D side and also on the capex side, with the customers.

Speaker #3: And the second question is linked to the smart glasses again. When do you expect to record the first significant revenue? Because it seems you have progressed well.

Speaker #1: And we continue to expect that also for the futures. That we share the risks and the opportunities. With our customers.

Speaker #3: Is it something for 2027, or is it too early? Is it more for 2028 and onward? Thank you.

Speaker #4: Yeah, and on the smart glass timing, like I said before, we're making good progress. We are not allowed to share the details of the launch, but yeah, still a bit of work to do, but have progressed very well overall.

Speaker #1: Yeah, Sebastian. Starting with the pre-cash flow: This year, excluding the proceeds from the divestment, I guess it will be negative, a bit more than €300 million.

Aldo Kamper: Sebastien. Starting with the free cash flow. This year, excluding the proceeds from the divestment, I guess it will be EUR negative, a bit more than three million. That is really why we are putting everything into this year. We are reducing the factoring by a good EUR 100 million. We are repaying the EUR 100 million customer payment. We are paying a lot of the restructuring expenses and everything else that should be paid to clean up to have a proper start into next year. Obviously, the free cash flow, including the disposal proceeds, will be significantly positive this year. Going into next year, CapEx might be a bit higher, certainly, for the new opportunities, but it is not that we pay all of it so far.

Rainer Irle: Sebastien. Starting with the free cash flow. This year, excluding the proceeds from the divestment, I guess it will be EUR negative, a bit more than three million. That is really why we are putting everything into this year. We are reducing the factoring by a good EUR 100 million. We are repaying the EUR 100 million customer payment. We are paying a lot of the restructuring expenses and everything else that should be paid to clean up to have a proper start into next year. Obviously, the free cash flow, including the disposal proceeds, will be significantly positive this year. Going into next year, CapEx might be a bit higher, certainly, for the new opportunities, but it is not that we pay all of it so far.

Speaker #2: Thank you. And last one on the AI photonics. You mentioned an expansion of your bill of materials. What kind of bill of materials do you have in mind for this kind of optical engine for you in the next few years, for instance?

Speaker #1: And that is really why we are putting everything into this year, right? I mean, we're reducing the factoring by a good €100 million. We are repaying the €100 million customer payment.

Speaker #1: We're paying a lot of the restructuring expenses and everything else that should be paid to clean up, to have a proper start into next year.

Speaker #1: Yeah, I think we haven't shared the details of that yet. But we do see that overall, if this market scales, this is an overall triple-digit million euro opportunity in the end of the decade time type of time frame.

Speaker #1: Obviously, the free cash flow, including the disposal proceeds, will be significantly positive this year. Now, going into next year—CapEx, yeah, CapEx might be a bit higher, certainly.

Speaker #1: How exactly that will ramp is just to be seen as still early days. And of course, the more value we can capture, the bigger that number gets.

Speaker #1: For the new opportunities, it's not that we pay all of it. For our other chair, I think we are sharing a lot of the cost, both on the R&D side and also on the CapEx side, with the customers, and we continue to expect that also for the future.

Speaker #1: So it's something where we feel excited about. We feel the technology has a place here. That we're re offering but yeah, it's still also a journey and we will see this business develop nicely over the next years.

Aldo Kamper: I think, Aldo and Jeppe, we are sharing a lot of the cost, both on the R&D side and also on the CapEx side, with the customers. We expect that also for the future, that we share the risks and the opportunities with our customers.

Rainer Irle: I think, Aldo and Jeppe, we are sharing a lot of the cost, both on the R&D side and also on the CapEx side, with the customers. We expect that also for the future, that we share the risks and the opportunities with our customers.

Speaker #2: Thank you. Thank you.

Speaker #1: That we share the risks and the opportunities with our customers.

Speaker #3: The next question comes from DBA Shinama from Bank of America. Please go ahead.

Speaker #2: Yeah, and on the smart glass timing, like I said before, we're making good progress. We are not allowed to share the details of the launch, but, yeah, still a bit of work to do, but have progressed very well overall.

Aldo Kamper: On the smart glass timing, like I said before, we are making good progress. We are not allowed to share the details of the launch, but still a bit of work to do, but have progressed very well overall.

Speaker #5: Hi, thank you for taking my question. It's Amelia Banks. Just one question on automotive. I think it came in really strong in the quarter, but just some commentary around this.

Speaker #3: Thank you. And last one on the AI photonics. You mentioned an expansion of your bill of material. What kind of bill of material do you have in mind for this kind of optical engine for you in the next few years, for instance?

Sebastien Tabovik: Okay. Last one on the AI photonics. You mentioned an expansion of your bill of materials. What kind of bill of materials do you have in mind for this kind of optical engine for you in the next few years, for instance?

Sébastien Sztabowicz: Okay. Last one on the AI photonics. You mentioned an expansion of your bill of materials. What kind of bill of materials do you have in mind for this kind of optical engine for you in the next few years, for instance?

Speaker #5: I mean, we've been hearing from peers some attributing it to content growth, some restocking, some citing, pulling ahead of maybe shortages. Just what you are seeing around here, I saw it was very strong in semiconductors, but maybe in lamps and systems, is it just really because of seasonality or is there a bit of a weakness there in the end markets for lamps and systems?

Aldo Kamper: I think we haven't shared the details of that yet. We do see that overall, if this market scales, this is overall a triple-digit million EUR opportunity in the end of the decade timeframe. How exactly that will ramp is just to be seen. It's still early days. Of course, the more value we can capture, the bigger that number gets. It's something where we feel excited about. We feel the technology has a place here that we're offering. Yeah, it's still also a journey, and we will see this business develop nicely over the next years.

Speaker #5: Thank you.

Speaker #1: Yeah, it's right. It's a two businesses have different reasons to show these very nice growth rates. The semiconductor side, I think it is a lot about share and content gains.

Speaker #1: How exactly that will ramp is yet to be seen, as it's still early days. And of course, the more value we can capture, the bigger that number gets.

Speaker #1: I mean, if I use platform is a much higher ASP than our conventional LEDs. That category is growing as an example. But it also about share gains.

Speaker #1: So it's something we feel excited about. We feel the technology has a place here that we're offering, but yeah, it's still also a journey.

Speaker #1: You might remember that one of our competitors, Samsung, has exited the market or mentioned it already about a year, year and a half ago.

Speaker #1: And we will see this business develop nicely over the next few years.

Speaker #1: We've won a lot of that business, and that is now, as he's pulling out, also coming our way. So that's also kind of a special positive effect in that we are gaining a significant share is our feeling in these markets.

Speaker #3: Okay, thank you.

Sebastien Tabovik: Okay. Thank you.

Sébastien Sztabowicz: Okay. Thank you.

Speaker #2: The next question comes from DBA Shinama from Bank of America. Please go ahead.

Operator: The next question comes from Divya Shenama from Bank of America. Please go ahead.

Speaker #5: Hi, thank you for taking my question. It's Amelia Banks. Just one question on Automotive. I think it came in really strong in the quarter, but just some commentary around this?

Amelia Banks: Hi. Thank you for taking my question. It's Amelia Banks. Just one question on automotive. I think it came in really strong in the quarter, just some commentary around this. We've been hearing from peers, some attributing it to content growth, some restocking, some citing pull-ins ahead of maybe shortages. Just what you are seeing around here, I saw it was very strong in semiconductors, but maybe in Lamps & Systems, is it just really because of seasonality, or is there a bit of a weakness there in the end markets for Lamps & Systems? Thank you.

Speaker #1: On the lamp side, it is the case that our main competitor, first brands that are using the Philips brand, in the retail channel, fell apart about nine months ago or so.

Speaker #5: I mean, we've been hearing from peers, some attributing it to content growth, some to restocking, and some citing pulling ahead of maybe shortages. Just what are you seeing around here? I saw it was very strong in semiconductors, but maybe in lamps and systems—is it just really because of seasonality, or is there a bit of a weakness there in the end markets for lamps and systems?

Speaker #1: You might recall the scandals around that. And we, of course, are asked by their customers to help them in this period. And we're happy to do so.

Speaker #1: And of course, looking also to longer-term commitments in this context, to make sure that it's not only short-term help, but also long-term business. And we are very successful in that.

Speaker #5: Thank you.

Speaker #1: Yeah, that's right. The two businesses have different reasons to show these very nice growth rates. The semiconductor side, I think, is a lot about share and content gains.

Aldo Kamper: Yeah, that's right. The two businesses have different reasons to show these very nice growth rates. The semiconductor side, I think it is a lot about share and content gains, and the EVIYOS platform is a much higher ASP than our conventional LEDs. That category is growing, as an example. It's also about share gains. You might remember that one of our competitors, Samsung, has exited the market, or mentioned it already about a year and a half ago. We won a lot of that business, and that is now, as he's pulling out, also coming our way. That's also kind of a special positive effect in that we are gaining a significant share, is our feeling, in these markets.

Speaker #1: So we are expanding our share significantly in this market at the moment. And the defend that going forward, but it's an extraordinary opportunity. And it's really because the strength of organization, the strength of the brand, that yeah, this business comes our way.

Speaker #1: I mean, if I use platform, it is a much higher ASP than our conventional LEDs. That category is growing, as an example. But it's also about share gains.

Speaker #5: Thank you.

Speaker #1: You're welcome.

Speaker #1: You might remember that one of our competitors, Samsung, has exited the market, or mentioned this already about a year, year and a half ago.

Speaker #3: The next question comes from Craig Mcdowell from JP Morgan. Please go ahead.

Speaker #1: We won a lot of that business, and that is now, as he's pulling out, also coming our way. So that's also kind of a special positive effect in that we are gaining a significant share, is our feeling, in these markets.

Speaker #6: Hi, good morning. Thanks for letting me on. My first question was on the higher of a new lead for the AI photonics business. And I'm wondering, could you elaborate more on his role?

Speaker #6: What are the priorities that you've given him for developing that business? Is it R&D focus or business development, if you maybe just elaborate on his priorities?

Speaker #1: On the lamp side, it is the case that our main competitor—first brands that are using the Philips brand in the retail channel—fell apart about nine months ago or so.

Aldo Kamper: On the lamp side, it is the case that our main competitor, first brand, that's using the Philips brand in the retail channel, fell apart about nine months ago or so. You might recall the scandals around that. We, of course, are asked by their customers to help them in this period, and we're happy to do so. Of course, looking also to longer-term commitments in this context to make sure that it's not only short-term help but also long-term business. We are very successful in that. We are expanding our share significantly in this market at the moment, and we defend it going forward. It's an extraordinary opportunity, and it's really because of the strength of organization, the strength of the brand, that this business comes our way.

Speaker #6: And then perhaps on what prompted him to leave NVIDIA to join AMS? And then I've got a follow-up as well. Thank you.

Speaker #1: Sure. Yeah. No, Ashkan joined us now a bit over a month ago, and he came from NVIDIA where he was instrumental in optical interconnect revolution.

Speaker #1: You might recall the scandals around that. And we, of course, are asked by their customers to help them in this period, and we're happy to do so.

Speaker #1: That is now going on at the moment. I think he felt really attracted and inspired by the technology that we have in stock for the next coming revolution in this space.

Speaker #1: Of course, we are also looking at longer-term commitments in this context to make sure that it's not only short-term help, but also long-term business. And we are very successful in that.

Speaker #1: And wants to be part of that. In somewhat different role, at NVIDIA, he was the enabler and the technical yeah, mastermind, if you will, beyond many of these things.

Speaker #1: So, we are expanding our share significantly in this market at the moment, and the fenders going forward. But it's an extraordinary opportunity, and it's really because of the strength of the organization and the strength of the brand that, yeah, this business comes our way.

Speaker #1: Now, in our organization, he's able to actually run a P&L on this business and make a real business development out of it. And we have charted him with, of course, now at the moment, defining a product roadmap going forward and building the customer relationships that are necessary to make this a broad-based success.

Speaker #5: Thank you.

Speaker #1: You're welcome.

Amelia Banks: Thank you.

Aldo Kamper: You're welcome.

Speaker #2: The next question comes from Craig McDowell from JP Morgan. Please go ahead.

Operator: The next question comes from Craig McDonald from JP Morgan. Please go ahead.

Operator: The next question comes from Craig McDonald from JPMorgan. Please go ahead.

Speaker #6: Hi, good morning. Thanks for letting me on. My first question was on the hire of a new lead for the AI photonics business, and I'm wondering, could you elaborate more on his role?

Speaker #1: It is also an ecosystem play. So it's not only about our technology, but also about how to interact with the people around us in the system, to make this overall success.

Craig McDonald: Hi. Good morning. Thanks for letting me on. My first question was on the hire of a new lead for the digital photonics business. I'm wondering, could you elaborate more on his role? What are the priorities that you've given him for developing that business? Is it R&D focus or business development? If you maybe just elaborate on his priorities, and then perhaps on what prompted him to leave NVIDIA to join AMS, and then I've got a follow-up as well. Thank you.

Craig McDowell: Hi. Good morning. Thanks for letting me on. My first question was on the hire of a new lead for the digital photonics business. I'm wondering, could you elaborate more on his role? What are the priorities that you've given him for developing that business? Is it R&D focus or business development? If you maybe just elaborate on his priorities, and then perhaps on what prompted him to leave NVIDIA to join AMS, and then I've got a follow-up as well. Thank you.

Speaker #6: What are the priorities that you've given him for developing that business? Is it R&D focus or business development? If you could maybe just elaborate on his priorities?

Speaker #1: And I think, yeah, him joining is for us extremely helpful as he's very ingrained in this whole ecosystem, knows the ins and outs, knows the application super well.

Speaker #6: And then perhaps on what prompted him to leave NVIDIA to join ams? And then I've got a follow-up as well. Thank you.

Speaker #1: And that really helps us to focus even more in our development activities and with that get to market quicker.

Speaker #1: Sure. Yeah. Ashcom joined us a bit over a month ago, and he came from NVIDIA, where he was instrumental in the optical interconnect revolution that is now going on at the moment.

Aldo Kamper: Sure. Yeah. No, Ashkan joined us now a bit over a month ago. He came from NVIDIA, where he was instrumental in optical interconnect revolution that is now going on at the moment. I think he felt really attracted and inspired by the technology that we have in stock for the next coming revolution in this space, and wants to be part of that in somewhat different role. At NVIDIA, he was the enabler, and the technical mastermind, if you will, beyond many of these things now in our organization. He's able to actually run a P&L on this business and make a real business development out of it. We have chartered him with, of course, now at the moment, defining a product roadmap going forward and building the customer relationships that are necessary to make this a broad-based success. It is also an ecosystem play.

Speaker #6: Very clear. Thank you. And then my follow-up, I want to ask on the comments around supply constraints and the OS business. Maybe you could just elaborate on what products that might relate to and whether you see that as temporary or structural how quickly or easily can you expand capacity to meet demand?

Speaker #1: I think he felt really attracted to and inspired by the technology that we have in stock for the next coming revolution in this space, and wants to be part of that.

Speaker #1: In a somewhat different role at NVIDIA, he was the enabler and the technical—yeah, mastermind, if you will—behind many of these things. Now, in our organization, he's able to actually run a P&L on this business and make real business development out of it.

Speaker #6: Thank you.

Speaker #1: Yeah. No, I think that the ones that we're referring to are temporarily in nature, mainly on the one hand, we are positively surprised by how quickly Avios is adapted and we've got some pretty positively chunky orders, especially from China.

Speaker #1: So we need to quickly expand here and pull in some of the capacity expansions we're anyway planned already, pull them forward. The other part that at the moment is in high demand is our Horti LEDs.

Speaker #1: And we have charged him with, of course, now at the moment, defining a product roadmap going forward and building the customer relationships that are necessary to make this a broad-based success.

Speaker #1: It is also an ecosystem play. So it's not only about our technology, but also about how we interact with the people around us in the system to make this overall a success.

Speaker #1: Here again, it's always a performance race. We can have the winning product and that then translates also into high shares. And that's also a quite impatient market that you need to fulfill demands in quickly.

Aldo Kamper: It's not only about our technology, but also about how to interact with the people around us in the system to make this overall success. I think him joining is for us extremely helpful as he's very ingrained in this whole ecosystem, knows the ins and outs, knows the application super well, and that really helps us to focus even more in our development activities, and with that, get to market quicker.

Speaker #1: And I think, yeah, him joining is for us extremely helpful, as he's very ingrained in this whole ecosystem, knows the ins and outs, knows the application super well.

Speaker #1: And we're doing so. So that's at the moment fully loaded. But under control. And yeah, those are two good examples here and there. There's some other product lines, but those will be the main categories at the moment.

Speaker #1: And that really helps us to focus even more on our development activities and, with that, get to market quicker.

Speaker #6: Very clear. Thank you very much.

Speaker #6: Very clear, thank you. My follow-up is about the comments regarding supply constraints and the OS business. Could you elaborate on which products this might relate to, and whether you see this as a temporary or structural issue? Also, is it possible to expand capacity to meet demand quickly or easily?

Speaker #1: Sure, welcome.

Craig McDonald: Very clear. Thank you. My follow-up, I wanted to ask on the comments around supply constraints in the OS business. Maybe you could just elaborate on what products that might relate to and whether you see that as temporary or structural, how quickly or easily can you expand capacity to meet demand? Thank you.

Craig McDowell: Very clear. Thank you. My follow-up, I wanted to ask on the comments around supply constraints in the OS business. Maybe you could just elaborate on what products that might relate to and whether you see that as temporary or structural, how quickly or easily can you expand capacity to meet demand? Thank you.

Speaker #3: The next question comes from Harry Blaiklock from UBS. Please go ahead.

Speaker #7: Good morning. Thanks for taking my questions. I'm wondering if you can give a bit more color on your comments around weakness in China. It's kind of consistent with the weakness we can see in auto unit sales numbers.

Speaker #6: Thank you.

Speaker #1: Yeah, no, I think that the ones that we're referring to are temporary in nature, mainly. On the one hand, we are positively surprised by how quickly Vios has adapted, and we've got some pretty substantial orders, especially from China.

Aldo Kamper: I think the ones that we're referring to are temporary in nature, mainly. On the one hand, we are positively surprised by how quickly EVIYOS is adapted, and we got some pretty positively trendy orders, especially from China. We need to quickly expand here and pull in some of the capacity expansions were anyway planned already, pull them forward. The other part that at the moment is in high demand is our Horti LEDs. Here again, it's always a performance race. We can have the winning product, and that translates also into high shares, and that's also a quite impatient market that you need to fulfill demands in quickly, and we're doing so. That's at the moment fully loaded, but under control. Those are two good examples here and there. There's some other product lines, but those will be the main categories at the moment.

Speaker #7: But a lot of your semi-focused peers have been reporting pretty strong numbers in the China market. It would be helpful to get a bit more color on what's driving that for you.

Speaker #1: So, we need to quickly expand here and pull in some of the capacity expansions we had already planned—pull them forward. The other part that is currently in high demand is our Horti LEDs.

Speaker #1: Yeah, I mean, it is the combination of, as you say, lower build volumes that, of course, kind of pulled down everybody, plus a lot of price pressure that is going on on the car OEM side already.

Speaker #1: I mean, they're fighting to somehow fill their factories on the one hand by export, of course, but also by local demand. And that filters through.

Speaker #1: Here again, it's always a performance race. We can have the winning product, and that then translates also into high shares. And that's also quite an impatient market that you need to fulfill demands in quickly.

Speaker #1: So we also have to make sure that we counter those pressures by optimizing our portfolio, by introducing now several echo lines to be able to also compete at lower price points at healthy margins.

Speaker #1: And we're doing so. So that's a moment fully loaded, but under control. And yeah, those are two good examples here and there. There are some other product lines, but those will be the main categories at the moment.

Speaker #1: So far, we're holding up, I would say. The losses on the low end are not that large. And we're more than making up for it by gaining share against internationals in China.

Speaker #6: Very clear. Thank you very much.

Speaker #1: Sure, welcome.

Craig McDonald: Very clear. Thank you very much.

Craig McDowell: Very clear. Thank you very much.

Speaker #2: The next question comes from Harry Blakelock from UBS. Please go ahead.

Aldo Kamper: Sure. Welcome.

Operator: The next question comes from Harry Baseck from UBS. Please go ahead.

Operator: The next question comes from Harry Blaiklock from UBS. Please go ahead.

Speaker #1: Broadly, but also specifically in the Avios platform that, as I said before, is doing very well in China and where you know we and Nichia are the only games in town.

Harry Baseck: Good morning. Thanks for taking my questions. I'm wondering if you can give a bit more color on your comments around weakness in China. It's kind of consistent with the weakness we can see in auto unit sales numbers. A lot of your semis-focused peers have been reporting pretty strong numbers in the China market. It'd be helpful to get a bit more color on what's driving that for you.

Harry Blaiklock: Good morning. Thanks for taking my questions. I'm wondering if you can give a bit more color on your comments around weakness in China. It's kind of consistent with the weakness we can see in auto unit sales numbers. A lot of your semis-focused peers have been reporting pretty strong numbers in the China market. It'd be helpful to get a bit more color on what's driving that for you.

Speaker #1: So that is definitely helpful. So China used to be very strong and compared to that, it's a bit weaker now. But it's still by far not a disaster.

Speaker #7: But a lot of your semi-focused peers have been reporting pretty strong numbers in the China market. It would be helpful to get a bit more color on what's driving that for you.

Speaker #1: It is a market that we're fortunately quite strong in. But as we are quite strong in that market, our market share is similar to that of Europe, 35, 40%.

Speaker #1: Yeah, yeah. I mean, this is a combination of, as you say, lower build volumes that, of course, kind of pulled down everybody, plus a lot of price pressure that is going on on the car OEM side already.

Aldo Kamper: Yeah. It is the combination of, I should say, lower build volumes, that of course now kind of pulled down everybody, plus a lot of price pressure that is going on on the car OEM side already. They're fighting to somehow fill their factories on the one hand by export, of course, but also by local demand, and that filters through. We also have to make sure that we counter those pressures by optimizing our portfolio, by introducing now several eco lines to be able to also compete at lower price points at healthy margins. So far we're holding up, I would say.

Speaker #1: We also kind of fluctuate, of course, with the build volumes. There's not no real way to escape that to some extent.

Speaker #7: Got it. Makes sense. And then a follow-up on the micro LED optical interconnects opportunity. I'm just wondering what metrics you're tracking to decide whether to shift the other components within the optical engine into the development stage?

Speaker #1: I mean, they're fighting to somehow fill their factories—on the one hand, by export, of course, but also by local demand. And that fills us through.

Speaker #1: So, we also have to make sure that we counter those pressures by optimizing our portfolio, by introducing now several Eco lines to be able to also compete at lower price points at healthy margins.

Speaker #7: And then also, what the content uplift would be for you if you were to also include the seamless driver as well.

Speaker #1: Yeah, I mean, it's a bit of a step-by-step approach. I think it's important that we get the core pieces where we are super differentiated right and that especially on the middle side, clearly the case.

Speaker #1: So far, we're holding up, I would say. The losses on the low end are not that large, and we're more than making up for it by gaining share against internationals in China.

Aldo Kamper: The losses on the low end are not that large, and we're more than making up for it by gaining share against internationals in China, broadly, but also specifically in the EVIYOS platform that, as I said before, is doing very well in China and where you know we and Nichia are the only games in town. That is definitely helpful. China used to be very strong, and compared to that, it's a bit weaker now, but it's still by far not a disaster. It is a market that we're fortunately quite strong in. But as we are quite strong in that market, our market share, similar to that of Europe, is 35%, 40%. We also kind of fluctuate, of course, with the build volumes. There's no real way to escape that to some extent.

Speaker #1: Broadly, but also specifically in the Vios platform that, as I said before, is doing very well in China and where, you know, we and Nichia are the only games in town.

Speaker #1: And we want to make sure that that happens and that kind of is the entry into this space. And then we will stepwise expand this as we explained.

Speaker #1: Now on the receiver side and then stepwise into further components. On the one hand, the more we can do there, the better it is.

Speaker #1: So, that is definitely helpful. So, China used to be very strong, and compared to that, it's a bit weaker now. But it's still by far not a disaster.

Speaker #1: At the same time, I also want to make sure that we don't overextend ourselves and can deliver on our promises. So yeah, give it a bit of time to figure that out step by step.

Speaker #1: It is a market that we're fortunately quite strong in. But, as we are quite strong in that market, our market share is similar to that of Europe—35 to 40 percent.

Speaker #1: It's a very active area where we're putting a lot of resources on. And yes, of course, the opportunity increases significantly the more driver content we also include to this but yeah, let's take that step by step and we'll keep you posted as we go along the journey.

Speaker #1: We also kind of fluctuate, of course, with the build volumes. There's not really any way to escape that, to some extent.

Speaker #7: Got it. Makes sense. And then a follow-up on the micro ADD optical interconnects opportunity: I'm just wondering what metrics you're tracking to decide whether to shift the other components within the optical engine into the development stage?

Harry Baseck: Got it. Makes sense. A follow-up on the Micro LED optical interconnects opportunity. I'm just wondering what metrics you're tracking to decide whether to shift the other components within the optical engine into the development stage. And then also what the content uplift would be for you if you were to also include the seamless driver as well.

Harry Blaiklock: Got it. Makes sense. A follow-up on the Micro LED optical interconnects opportunity. I'm just wondering what metrics you're tracking to decide whether to shift the other components within the optical engine into the development stage. And then also what the content uplift would be for you if you were to also include the seamless driver as well.

Speaker #7: Great. Thanks, Heather.

Speaker #1: Sure, welcome.

Speaker #3: As a reminder, if you wish to register for questions, please press star and one. There are no more questions at this time. I would now like to turn the conference back over to Jürgen Rebel for any closing remarks.

Speaker #7: And then also, what the content uplift would be for you if you were to also include the Seamless Driver as well.

Speaker #1: Yeah, I mean, it's a bit of a step-by-step approach. I think it's important that we get the core pieces where we are super differentiated right.

Speaker #3: I'll wait to have a last-minute registration. From Robert Sanders from Deutsche Bank.

Aldo Kamper: Yeah. It's a bit of a step-by-step approach. I think it's important that we get the core pieces where we are super differentiated right, and that's especially on the emitter side, clearly the case. We want to make sure that happens, and that kind of is the entry into this space. Then we will stepwise expand this as we explained now on the receiver side and then stepwise into further components. On the one hand, the more we can do there, the better it is. At the same time, I also want to make sure that we don't overextend ourselves and can deliver on our promises. Give it a bit of time to figure that out step by step. It's a very active area where we're putting a lot of resources on. Yes, of course, the opportunity increases significantly

Speaker #1: And that’s especially on the middle side, clearly the case. And we want to make sure that that happens, and that kind of is the entry into this space.

Speaker #6: Oh, hi there. Yeah, could you just talk a bit about the cash burn in Q3 versus Q4 and how we should think about that into the first half?

Speaker #1: And then we will stepwise expand this, as we explained. Now, on the receiver side, and then stepwise into further components. On the one hand, the more we can do there, the better it is.

Speaker #6: Thanks.

Speaker #1: Yeah, hi, Rob. Yeah, I mean, the cash burn will continue to be quite a bit in the second half of the year. We'll continue to reduce our factoring.

Speaker #1: At the same time, I also want to make sure that we don't overextend ourselves and can deliver on our promises. So, yeah, give it a bit of time to figure that out step by step.

Speaker #1: significant payouts for restructuring. As I said, for the entire year, excluding the proceeds from the divestments, I expect it to be a bit more than 300 million euro negative.

Speaker #1: And again, including divestment proceeds quite positive.

Speaker #6: And into the first half of next year?

Speaker #1: Next year?

Speaker #6: Yeah, the first half? The first half? Next year?

Speaker #1: Yeah, in that guiding process over the second half, but next year we continue to see a path towards a free cash flow.

Speaker #6: Okay, thanks a lot.

Speaker #3: There are no more questions at this time. I would now like to turn the conference back over to Jürgen. He will have any closing remarks.

Speaker #5: Thank you, operator. Thanks, everyone, for dialing in. For your questions and for your continued support, if you have further questions along, reach out to us at investor relations.

Speaker #5: Or we'll see each other on one of the roadshows and conferences during the quarter. With that, have a great day and speak to you next time.

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