ASBIS (ASB) Q2 2026 Earnings Call Transcript

Thank you for coming. We are here one more time to present our Q2 and H1 results. At any point in time, please interrupt to ask any questions you may have. We touched key corporate events. In Q2, we grew almost 80% on the top line. 1.7, almost billion dollar turnover. over. More importantly, we grew gross profit by 89% year-on-year, reaching $120 million. The margin was a bit lower, $7.07 for Q2. But most importantly, and we see details after, we managed to significantly increase the bottom line by 265 percent reaching exceeding 44 million for q2 raising the bar to 80 million net income for for h1 main business directions as we will see after the ai server and server component business is growing very healthily for for the Aspis Group. It still keeps its number one position exceeding the smartphone segment. So the second biggest direction is the uphole, growing very healthily year on year, approaching 40% growth year on year. We still concentrate on components distribution business, but we pay of course most of the attention on the I components, products of which we have the full range both ssds hdds memory for servers and the servers themselves we continue also the consumer direction engaging into more contracts with suppliers both with own retail stores but also with third-party products the second life business the breezy we keep investing into this business and we expect this business to continue to grow significantly the asbc retail part of the aspis of the aspis group we will see after that we are growing this business all over the globe with the most recent establishments in in california we have these 15 corporate investments corporate venture investments and we continue though in a smaller scale in the arrows in the arrows direction key corporate events we are a star performer for eastern europe for nvidia For those who came to Cyprus for more detailed presentations, this by itself takes us into this ecosystem where NVIDIA is present, supplier of technologies are there, technology of NVIDIA into this business of our suppliers. We are the preferred technology distributor for this business. And we are mostly ultimately serving tier one customers like Microsoft, Amazon, Meta, etc. So it's not by accident we are there. We prepared well enough on time. We signed all the necessary franchises with suppliers. partners. We are the NVIDIA preferred EMEA partner, therefore the gain out of this business coming to Aspys on the technology distribution side. Recently we opened the second shop, Bag & Olive's Flagstore shop in the US in California, expanding our ASBC presence, the retail arm of Aspys. And recently, as announced, we gained the franchise of another 14 West Africa countries by Apple. In an effort to further develop the business with Apple, we have 25 countries to distribute Apple products today. And this eventually, after further development of this area, we expect significant growth in these countries. Partner awards, Star Performer for Eastern Europe, for NVIDIA. That says I think everything they prefer us. We are in this ecosystem. We are following up with NVIDIA being the partner of, technology of which goes into our supplier products. Therefore, this has opened already the door, and that's why the significant growth on this AI server and server component business for us. Some pictures from the second opening in California recently. I think with this presence, you know, we are more or less becoming global players. It was historically Central Eastern Europe. Then it was Central Asia. Then the Gulf. Then North Africa. Then we had South Africa. Now we are expanding into West Africa. And now with this expansion of retail stores into US we are becoming a global distributor. Premium and luxury retail business unit we have already seven Bang & Olufsen stores as I said the last of which was in California. We are running Apple APR stores counting 36 in the number and with the recent acquisition of Media Matrix business in Poland earlier this year, you know, we are expanding our footprint in this retail business, a business that is taking a significant part out of the whole of our space business and is aiming to further increase, both for the Bang & Olufsen, but most importantly for the Uphol. Some pictures out of West Africa, a bright possibility for us to grow business. We already started and registered companies in Ghana and the Ivory Coast. We hired people, we rented offices and warehouses, and we are gradually trying to expand business there. So far, most of the business is run through the Middle East, the Dubai establishment, both for logistics, but also for management of this business. But as the local team grows, we will expand the business locally, local to local. This will take some time. We don't expect any material numbers this year, but from next year, we expect to see both regionally through Dubai, but also locally to do more business. in these countries. As I said, the main focus today is Ghana and the IORI cost. That's why the registration of companies and leasing of offices and warehouse space. Algeria is also a big market known to us for more than two decades. We've been serving North Africa through Cyprus, logistically through Czech warehouse, but Algeria, Morocco, Tunisia, these countries we've been serving for quite long. successfully, I have to admit, but now with the franchise of Apple, this gives us a different perspective. Therefore, we want to leverage on that perspective and further grow the business starting next year. The characteristics of the population that we name there are very positive for us to engage into this Apple business and grow business for us in the west part of Africa. So geographically, Central Eastern Europe, Caucasus, Central Asia, South Africa that also distributes product to whole South Africa part of the continent. Now we have West Africa. And through this establishment, we can do more business in nearby countries, of course but we have already a lot we have 25 already for for apple to grow business in so the future i think is bright given this extra distribution rights we got from apple a slightly amended board of directors for aspis the three of us sergey kostas and myself are with the company we are 25 years sergey is from the beginning of all the business we have we have three executive non-executive directors recently we invited the ex CEO of Bang & Olufsen Christian tear to to join us and help the company also grow into this mostly retail segment that he had a vast he has a vast experience of a little bit on the financial results I'm not sure you had the time to to have a drill down on these results we can cover it now and if you won't interrupt me to ask any questions we talked about the top line 1.7 billion for q2 almost 3 billion for for h1 most importantly we are growing on gross profit at the pace year on year at a pace that is much better much higher than the increase in the SG&A's a big question mark but the answer I will give you right away we have more or less flat financing costs because the company does quite well not only on the income statement but on the cash flow as well this is unprecedented for our group I remember the group for the last 25 years we never had such a positive number from operating activities never before and we never had for the six months a positive cash from operating activities at this level with 220 million bottom line on the balance sheet as net cash position this is mainly driven we will see some slides after this is driven by an improved working capital management improving cash from operating activities we don't have any more any significant capex on the investing activities therefore we managed to to grab more cash from customers on time or even early and this is improving the receivable days with this phenomenal growth on the top line we are reducing inventory days therefore the cash to cash cycle both in numbers and in days has significantly decreased in shortage times customers have a tendency to pay on time to get scarce product and a lot of times I said it earlier we get cash earlier a lot of times we are asked by suppliers to pay a little bit early because of big deals and we had to grow lines with suppliers from zero to 200 300 million because of this phenomenal growth on the top line but overall we are gaining out of this product shortage into the market everybody makes good money and everybody wants to take advantage of that therefore the cash flow is king to this growth any questions

on the income statement before we move forward and one question what you just said about the especially inventory because the inventory levels are receivables and the payments increase with the revenue but not the inventory my question is same with receivables yeah but the receivables increase a bit it's visible but not the inventory so is it because of the ai projects which do not require you to purchase the inventory and keep it on balance sheet or is it because of this situation with uh shortages it's a combination of these things we are buying

same or more product but with this crazy demand we are flushing it out and this mainly relates to this AI business you know it's come and go product it's not product to see it on the shelf for long a period of time this is a phenomenon that is characterized by this product shortages this is what is driving things that's this is what is driving less days everybody pays on time you know you have much increased sales this is decreasing the inventory days yes and this is what is improving the cash from operating activities so in case the uh supply side improves and the shortages are to lesser extent we can expect increasing inventory levels we could we could because you rightly said with 30 40 50 percent lower sales we had same inventories now we are running this level of inventories with much increased sales so every everything requires management you see in good days and in bad days the good thing about inventories is that we are authorized uh franchise distributor and that's the difference between a reseller we are covered on the inventories but you still need to manage it yes yeah for the apple business yes that's sure not only for the apple i mean for So the whole component business, you know, they give you a space to retain product that is going obsolete or out of life or, but that needs management. You need to know what is running out of technology, you know, and do something with the vendor quickly before the period lapses. So it's all about management.

And for the server business, do you expect the situation to change that the company will have to sustain some higher level of inventories or rather not rather not because this is what is actually improving okay yeah yeah the cash flow yes thank you thank you so congratulations on the cash generation again i'm not quite sure which quarter i'm saying the same uh i noticed in the operating cash flow there were some provisions created uh in the first quarter and the second quarter as well so i assume that was accounted for on the gross profit level and decreased it's below the line below the line i saw your comment it's below the line okay it's sitting and selling expenses not in gross profit okay okay thank you again there we are being prudent, yes.

We don't want to come in December and write the provision of 10 or 15 million, yes. The company is doing quite well. We always did have this conservative approach. When we see a problematic issue with a receivable, we don't wait until September or December. And then we, you know, they dislike us. The analysts say, why did you expect December if you saw the issue. This time we did in December 25. We did in March. We are assessing and we are providing. If the receivables do well, then we reverse the provision. If they don't, we touched all the quarters. We didn't wait for December 2. But again, it doesn't touch the gross profit lines. It's below the line. What touches the line could be an inventory provision but the receivables provision is below the line because it's the interim report is the ask 34 you see when you go full-blown financial statements and now your report you would see that yes it's in the notes in the receivables anyway you can follow the sub receivable note that talks about provisions beginning charge for the for the period etc but it will be more analytical for the year could you please comment on the variance uh in a gross profit margin between the quarters as well as the year over year it's still quite quite a decent level but it's much much below that both the growth as well as the level that you you have you had in first quarter um so what was the was the speed between the the the price effect and mix effect and so on and where do you see the margin going forward we agree that year on year we had an increased gross profit match yes it's 707 but last year was much lower well below seven yes that's one it was lower than q1 but in q1 in may we were here and we explained that this significant increase in prices of server and server components having to do with the ai technology you know ventos increased prices quickly and we had a of stock we took advantage of that stock and we ended up with very high gross profit margins we explained because a lot of analysts and investors asked the question we didn't expect to be the gross profit margin to continue to be at those very high levels like in q1 so one would expect lower if you ask me may how much lower i wouldn't know was it 7.5 with 7.2 i don't know What we know is that we elected to pick up a lot of orders on the table with lower match. Maybe that's why we had 1.7 billion in Q2 of turnover. It could be much less. If you do that, you continue having business. It's business continuation. Whether you drop, whereas if you drop certain projects on the table, they may not come back to you again. And these are not one of projects, yes? The Gazak Telecom, for example, is a project that's been going on for two years. We still continue, yes? There, the margin is much better because we are also the system integrator. But other projects come with lower margin. We elected to take it. The cash flow was strong. The cash flow of this project was positive. The margin was a little bit lower, but we elected to do it. So it's an election thing. It's an election thing. Now, my last comment, is 707 satisfactory for Q2, for the company? It is. It is. And I expect this is the lower base of the gross profit margin we envision for the year.

I will follow up, if you don't mind. Do you expect the margin to drop even below 7% in the future, or rather it should be a floor?

I think I answered the question towards the end. I don't believe, from what I know now, I don't believe that the margin will continue slipping below 707.

Okay, and the other one, the decrease quarter on quarter, in your opinion it's more affected because of the price effect from the first quarter or rather the new deal effect which we can see, I don't know, in sales to Netherlands for example or Taiwan. So as you mentioned, new customers, First low margins at first, later bundling and higher margins perhaps. So is it, in your opinion, the impact of the new clients or new deals bigger on the margin or rather the price impact from the first quarter specifically?

Some very big projects come with a lower the margin and there is a lot of negotiation happening with suppliers, with technology distributors, with system integrators, with the end customers with all those tier ones big names i mentioned earlier so and then yeah everybody has to make an election yeah suppliers will i give that price that nibius is asking me in the netherlands or project to go to america or project to go to germany or not same we do and a lot of projects come with lower the margin four percent five percent and we elected to take it it's big volumes it's cash flow positive it's good for the company so the impact of the new projects could be even higher like than the than the decreasing price increase i would say of the memory and so on right it depends on a lot of factors you see there is a lot of product shortage um still prices increases not so sharply like in q1 q4 end of q4 beginning q1 but there are a lot of factors and finally each company has to make its own decision okay yeah thank you yeah group i would like to continue this quarter-on-quarter comparison yes but namely q1 to q2 say sorry q1 to q2 yes q1

to q2 yes namely as regards the sgna's because you record that more than 30 percent growth of revenues quarter on quarter but your sgna's growth by only a couple of millions so i'm I'm just wondering whether it is only a pure operating leverage effect or if there is something additional happened. And whether this SG&A to sales ratio, assuming the more or less the same sales mix in the following quarters, should be also sustainable.

It is sustainable, I believe, from what I know now. But the main part of it is the expansion to West Africa. We started already having companies and employing people both in Ghana and Ivory Coast. It's the expansion of the retail arm in the U.S., expensive one, yes? And some product expertise, especially on the IA segment, as we grow bigger and as we are becoming more evident in the ecosystem, you know, we need more experts to help us, and these are expensive as well. So other than this, no other one-off, big one I can name. So we expect this level to be sustainable, Jakob, going forward. And I think it's a very reasonable level given I will not touch the top line. I will touch the gross profit line. What's the percent of growth on the gross profit where we pay 50-60% of the sales, marketing, PLMs, etc.? It's on gross profit. So I think we have a good ratio there. And yes, a lot of times we have to increase caps to people because with this business increasing so dramatically, you know, you have to pay extra people, extra money to people. But, you know, that's part of the cost we are bearing, but affordable cost given the delivery of the gross profit they bring back to the company. And because of this cash flow, maybe we didn't touch the outsiders, the financing cost is more or less flat. It's more or less flat considering the top line growth, 80% year on year, it's not a small percentage. And the fact that the interest rates are not decreasing. We actually had 25 basis points on the euro increase and we expect another one. But given these results, you know, we didn't have a lower. So what did go lower? The margin we paid to the banks. We have a different company in front of us. We have a 400 million equity, we have a total balance sheet of 1.6 billion. We are assessed better by the banks, and this gives us a better margin. On the dollar and euro, we are borrowing, the last borrowings that we are not small at all was more than 120 million. We are borrowing with a spread not exceeding 1.5. So we are doing a lot. We don't just rely and relax on much increased gross profit. we do the utmost below the line including the provisions by the way you know we are writing significant provisions there we are not hesitating and we are still delivering a very good net income line and as a margin net income as a margin to sales is also improving as well okay thank you one question regarding the margin so can we expect in Q3 or Q4 when you sell probably more consumer goods like iPhones etc so the margin could be a bit higher towards the year-end I'm not sure I understand the question right to give you the right answer can you right if in q3 and q4 you usually sell more icons seasonality says i personally lost the seasonality trend in this company because q2 is the lowest quarter in terms of sales and profitability and we never had such a quarter in terms of profitability in any q4 so i'm lost a little bit with the seasonality but if this seasonality the historic seasonality continues then one would expect given the product launch of apple sometime in september to do better to do better now will the ai business continue so well in the rest next months depending on a lot of things supply constraints pricing very expensive but these big boys tier ones continue with no stop no stop they don't mind the price smaller the players may mind the price but we're dealing with those big ones for now so yes i have a tendency to also believe better that's what we expect maybe not much better but better yes back to school

christmas because we are wholesalers we have to feed the market from end of august beginning of September following up on the seasonality and the launch of the new iPhones do you have a maybe and signals reached you about the shortages or potential shortages of Apple merchandise or for iPhone 18s because there are obviously issues with rams because of the production of because the switch because the memory companies switch the production to AI memory so we have less ordinary ram memory so does it affect the iphones and maybe apple already signalized something

that that there could be shortages of iphones or if not shortages significant price increase of the new models it affects everyone so i'm sure it affects apple because apple came up with a number of statements public statements so they will decide what to do their prices a lot of articles People talk about iPads and Macs, price of which to increase by 20-25%. Will that happen or not is their decision, depending on what market share they want to Does it affect Apple? Of course it affects Apple. It affects everyone. The automobile companies, it affects everyone. There is a big shortage. And this is the shortage we are running. That's why we are running these margins, yes. But that's why the cash flow is so good.

But did you receive any information or signals from Apple that there could be issues with supply for Asbis for the new launch?

We had supply issues, but we managed. Overall, we managed. And we have with the AI business supply constraints, but we managed quite well. I cannot say 100%, but 70%, 80% we managed. Now, will that get worse and the 80% drops down to, I don't know, 60% or 70%? I don't know. So far, so good.

Okay, thank you. so for now you don't expect in trouble for now in this regard no we expect to make money yeah that's good but you know but if there are no iphones then there will be iphones okay there will be iphones and if some vendors need to be prioritized i'm sure one of them will be up for years hello i have a question about uh your pipeline or backlog in servers and its effect on gross margin you mentioned the mix in server projects especially affecting your gross margin i was wondering now you have a pipeline of over yeah almost 900 million us dollars

what kind of projects are in this pipeline and do you think there are more like margin supportive higher margin or those lower margin projects that were in the queue too it has to do with the ai server and server component business most of it right this is the backlog we see coming to us from our customers placing a backlog with the technology distributor likewise back to back we place a backlog with suppliers but still there is a question mark will micron um solid dime amd all these big players you know super micro be able to cover that backlog delay the backlog cancel the backlog still remains unknown but we know from the numbers we've shown that we had these backlogs and these backlogs realized into crystallized into sales that's why we came to these numbers yes so we expect this to continue and this creates the backlog for the next two to three quarters touching also q1 next year and this repeat has to do with ai server server components so you don't exactly know yet the impact on gross margin that you're that you have in your pipeline am i correct we know some deals what margin to expect some of them are big deals that are recurring continuing deals for a big project usually big projects i think i said it earlier comes with lower margin and it's up to us it's an election to pick it up with lower margin call it four percent five percent with positive cash flow and continue the business and keep the customer with you so it's an election yes okay sure understand so far we elected to go for turnover even with lower margin but with positive cash flow today's price is losing about 4% and probably there are some information that you

told that you are afraid that such a big sales will not be continuing third and fourth quarter.

What sales? The 600 level sales say? May not, may not, possibly not, but it could be not for july or for august these are the slowest months for the year summer holidays yes but then we may see even higher numbers later on we don't know exactly we can have a feeling from the backlog we see we know what projects are being cooked and are recurring projects but we don't know everything yes we continue the business we continue satisfying our customers we continue being in this ecosystem being a preferred distributor and partner to nvidia that's the business we are in we are not afraid of anything but you still have possibility to increase sales of servers and so on there is depending on projects we don't create the projects we work with suppliers with Nvidia on these projects yes the tier one create the projects one of chief of big customer thought that he's not negotiating any price he's taking he's paying everything what I will quote unquote what you said everybody cares about price some suppliers came up with very high prices and we are left out of the picture. And their sales are much lower than others. Solidime is a big example. Ex-SK Hynix that purchased the division from Intel. They are growing very quickly. They are approaching one trillion market cap company. And they are, same with Micron, by the way. They are keeping, with this exponential growth of the business, they are keeping lower prices than others. So it's a trade-off. Each company has to make an election, yes, not only the technology distributors, but also suppliers, yes. They are not all behaving the same. Some technology companies, distributors, compared to Aspies, may elect not to take a 4% or a 5% project for AI business. We may elect to take it. It's a company decision. But the growth is there. Whether the growth will be at 600 levels, sales for the months to follow, I don't know. especially some of the time, maybe less, but the growth is there.

Do you see also such a big growth in next year?

We see some of next year in this backlog, but too early to say for 2027 whole year. But we expect, personally, I expect this business to continue in 2027 and onwards. This is not something that will finish in 2026 or early 2027. we don't have any indications that this business will end the statement you made earlier coming out of one of those system builders you know it's not by accident say we will continue paying we continue building this we listen to a man he has a bigger brain than mine thank you so we continue with the presentation or any other questions on the income statement i'm sure i will get a lot of questions after the analysts drill down on the on the numbers so i'm expecting them with your questions and i will get back to you soon countries revenues kazakhstan obviously is uh is retaining its number one position this e-mei registration is helping us a lot killing more and more the great channel the vat fraudsters coming into the market at times with much lower the prices you know this intensification the efforts of the government and it's not only kazakhstan is doing this whole central asia ukraine is doing it caucasus is doing it is helping us a lot um this ai business put a lot of companies that historically are not in the part part of this top 10 like netherlands and taiwan into top five top six um ukraine though the war with russia is doing quite well. Poland is keeping its number seven, number eight in our position, growing healthily year on year. And below we show the highest growth in these countries. The only comment I wanted to leave this slide with is that Central Asia is not only growing anymore with with the apple business i gave you earlier an example of kazakh telecom significant ongoing recurring project we are also the technology distributor but we are also the integrator for this project that's why higher the margin so these countries also grow with ai business not only with iphones and the rest of the apple business How sustainable is Netherlands and were there any big contracts? Some of them may be built to Netherlands, but the ultimate projects may sit in Germany, may sit in Italy, may sit in the US mostly. Because these three tier ones I mentioned earlier, you know, are built in America, but not only. Some of them are in the Netherlands, Netherlands is considered to be a hub for this business.

So the Q2 numbers for Netherlands is not one big project that just happened?

We have a lot of Nibius projects that is Netherlands-based. But Nibius is not only built in Netherlands, they are built everywhere. So I'm not finding the ultimate destination of the product to show on the screen. I'm building this company, I'm showing companies like this. Nibius is a big part of this ecosystem. A lot of suppliers have created separate teams to assist with Nibius projects, just focusing on Nibius, so big. But Nibius again is not building for Nibius only yes exactly and not only yeah this can be direct and or indirect customers by the way in direct through Taiwan because they prefer the system integrator to be Asus tech or Gigabyte or or sometimes they buy directly sometimes we we build them in Netherlands sometimes we build them elsewhere so they are all over all over the globe not all over Netherlands or Europe yes.

Could you perhaps share what were the approximate gross margins for sales to Netherlands and Taiwan?

Lower than 7%. That's expected but a bit more precise. Closer to 6%. Okay so not 5 to 6, 5.5 to 6. So not 4 to 5. But not all the projects through these names go with the same margin yes no no that's understandable thank you is it typical to expect lower gross margins in western europe it depends on the project not the country it depends if you have intermediaries acting as system integrators it depends on the negotiation between the tier one and the supplier and a lot of others before it comes to us to accept or reject the deal So there is a lot of ongoing negotiation in the ecosystem. Some suppliers decided to increase so much the prices that nobody would buy from them. They serve only specific projects. They make a lot of money, but they don't run the sales we do as distributors or others as vendors. So it's the election I mentioned earlier. But these big tier ones, I think they are getting the credit out of these investments. through their market caps because they are raising their market cap significantly into trillions i have to admit so some people say why do they pay so high prices because there is a benefit of doing so they are not acting irrationally yeah so we can go over live and see the regions cis because of the growth in kazakhstan ukraine azerbaizan is is leading the race continuing to leading the race western europe because of these ai projects and also other region because of countries like taiwan given this ai ecosystem are growing very well year on year central eastern europe growing but not at this pace lower the ai business we're still having but lower that and middle east finally start to pick up given the clash the war with iran it starts to feel better in terms of characteristics of the market and ability to sell more product lines the server and the server components and blocks is growing very nicely we i think we touched it from different angles in previous questions you guys had the smartphones is growing very nicely 36 year on year now remains to be seen with a new iphone how successful this will be at what the price the questions i received many times eventually they have to increase prices and this mainly these two are the ones we concentrate on like you know the whole ecosystem is concentrating on so we do exactly the same this light because it's so material right material right now that it's nearly half of the whole sales so do you consider splitting it into separate categories like SSDs or memory or separate servers yeah if it grows much more I think we should but it's already at very high levels, you know, compared to the 1.7, the 7.23 is very significant. So if this continues, we may. I don't know how much sense that would make to see if it's SSD for server or memory for server or server itself or cooling systems or other systems. I mean, it could be helpful during the price surges or when the price, for example, for memory specifically changes then investors could estimate the FIFA effect for example a bit better if you know what I mean yes but I know what you mean by it's a difficult exercise for us as well to okay because not all the vendors do exactly the same memory is not behaving the same as SSDs some people prefer the HDDs to to take care of that price increases on SSDs especially for servers and the shortage so it's a real mess happening on prices so one thing we know is that we don't only grow because of pricing especially for q2 it's mainly volumes it's mainly units yeah i'm i don't know how better to split i mean if there's any better way to split this but we are thinking about it so far i think we are good we'll see we'll see if this out of this 1.7 was 1 billion or 1.2 billion and we should do something about yeah okay i see thank you what part of sales store ukraine is now servers 10 10 10 is mostly apple ukraine is a distributor of all products it's a broadliner uh almost a broadliner so it's not Not only the Apple business, but the Apple business is growing more than the others in Ukraine. And I repeated that this EMI registration for Kazakhstan also applies to countries like Ukraine and other Central Asia, and this is helping us a lot gain market share.

A question about the technology of your servers. You are stating that you are selling majority of the NVIDIA GPUs within it.

We are not selling the NVIDIA. the nvidia technology goes into our supplier products we are the preferred partner of nvidia we have a relationship with nvidia they give us credit notes they support their business etc and buys from specific vendors but the product we buy from suppliers of technology not from nvidia so i will have another question therefore but but first uh so within this technology stack that you are selling or providing with nvidia insight where are you from between the 800 chips and the 200 chips for example how advanced are the servers that you are selling

and within this eight eight hundred sixty million dollars that you are providing in the pipeline what what's the amount of megawatts over there that's a very detailed uh question your answer i i'm not ready to one i don't have the information to answer it okay and the second one then uh Is it possible that within the nearest future you will be the direct distributor of the NVIDIA?

Everything is possible. Or opposite. Nothing is impossible. But a lot of... It's not on a table right now. It doesn't make sense for now a system integrator to become a technology distributor. It doesn't make sense for us to be a totally integrator. will a lot of suppliers go directly to the end customer and avoid the technology distributor they haven't done it we don't expect them to do it a supplier doesn't want to become a distributor why would Micron become a distributor they make a lot of money out of their technology so there is a space for everyone not for everyone for certain companies we are a certain company in this ecosystem as a technology distributor preferred partner to NVIDIA having all the contracts of distribution because one vendor may become a distributor of one product. How can they get the rest of the products? It's a different business. will they come to us and sell their technology and then we do what? We take Micron as a customer and we sell to It doesn't fit. It doesn't sound right.

There's space for everyone. in this ecosystem do you think about new vendors what i mean actually such companies like amazon google they are right now big producer of this tpus gpus tier ones yes yes as i as i understand for the time being they they use it only internally do you believe in the future they can that they might sell it also to external customers and do you believe this may be some kind of business for up to them as a strategy wise to decide but are there any talks do you talk with them about this that you could be no distributor of this no they are in the ecosystem we are talking to some partners of these people either the system integrate or the supplier we know that the

ultimate product will go to these companies for certain projects not all projects go to these companies of course and then Nvidia is it true that Nvidia considers a production of whole servers and maybe reducing the chain the distribution chain which could then make it possible to directly work with us this or is it not true because there are rumors there are some press releases that Nvidia in fact aims at i don't expect if rumors materialize this is positive for aspis they need a technology

distributor okay with know-how with people with expertise with all the product lines in place the whole product portfolio they don't want to touch 20 30 different distributors to get all the products they need to prepare a system those are important factors for aspis to be part of this ecosystem. That's why we are there. That's why we have value to this ecosystem.

Yeah, for us, this, of course, also because of the relations with customers. But for NVIDIA, it could be beneficial if they take over more of the production, like they take over bigger part of the production process. And if they could produce the whole servers on their own.

I think they have the right. But I cannot judge for them, but my own opinion is that they have the right strategy in place. And it's not by accident that they're approaching $5 trillion market cap. Why change that strategy if it is so successfully proven so far? I don't understand. And we had a lot of questions like that in earlier years. Dell is coming to Europe. Will they go direct? They have a direct model in the US. They've never gone direct in Europe, especially emerging markets of Eastern Europe. Central Asia with what the cost didn't make any sense so I don't believe this makes sense for a company this size my own take I may be wrong okay okay thank you as GNAs please we talk to them they come to Cyprus every quarter

But you are not buying from them?

No. No, we are working with them. We are partners to NVIDIA. And we are a preferred partner to NVIDIA.

Well, that's my question. Why you are the star performer for NVIDIA? Because we are a good company.

Because we have the know-how. We know NVIDIA technology. We study NVIDIA technology and we pass exams. Not personally me. we have technicians that work with NVIDIA on their technology to promote their technology that's why they rebate us not being a direct customer they rebate us we are partners so they are pushing their technology through the technology distributors so know how we are the technology partner preferred for this ecosystem provenly with all the product in place franchise of the products in place therefore we assist the ecosystem them to work properly Swiss watch that's why we are preferred partner to NVIDIA all the ingredients to be a preferred partner or NVIDIA are there for us that's why we are for Eastern Europe and maybe for other regions as we go for so as GNAs I think Jakob is a percentage of turnover we are doing quite well if you agree with me the incremental increase in the number of staff We have given the expansion in America, expensive one, and Western Europe, also expensive, also expanding now in West Africa, the benefit of which will come only 26 towards the end or maybe 27. But we still need to make investments. You remember, we were growing SG&As and you were asking, guys, why are you growing SG&As so quickly, so rapidly? the gross profit is not even at that level at times, a couple of quarters because of this AI technology we were preparing we didn't know exactly when that would happen and it happened in Q2 2025, they said oh that's why we are in the business every day, we don't expect you to know exactly what we know every day I'm not totally into the technical business every day, I'm managing other parts of the company but this is now evident, now you understand So I think overall we are doing okay with the GNAs. We have to pay people a lot of money, but they make a lot of money for us, so that's okay. We are not losing stuff in this hot environment. We are not losing stuff, which is very important, very critical. Because you have the NVIDIA preferred partner position, but it's not a guarantee you will continue having it. Same with suppliers. It's not a guarantee that Intel, AMD, Solidime, Micron, all these people will love you going forward if you don't deliver numbers. To deliver numbers, you need the right stuff. It's about people. So that's very important as well.

But outside the SG&A, I talked about financing costs that we are doing very well, given the I have a question of the expansion of operations in Africa and the US. how many new employees are you planning to add in the next quarters like many new markets to cover probably we see a small move in the second quarter but I think it's not complete right it's not complete yet Ghana and I work cause we just started us each shop takes 25 26 people depending on the size we want to have another two in California.

We want to have some more in West Europe. More announcements will come. So, yeah.

A few hundred people, like by the end of the year?

Maybe less. The rest will be 27. Because everything takes time. You hire 200 people and then you start growing business the next day. It will go gradually, yeah.

Understood. it thanks so I would say to have a few questions to to the previous slides on AI servers and components yes you know more than me on AI servers and components or I'm not sure I'm still still learning there is a lot to learn about this space I remember the slides for 2025 so there were some revenues for like DRAM not memories and so on and so forth because now the slide changes within it's about servers more access like you saw in Cyprus no in 2025 also show you here yes we also showed it so it was in a full year presentation so I assume so my first question for 2025 the the sales in this segments were related mostly to generally memory and now you are selling more the whole servers the whole racks like GPUs memory all that networking equipment inside one rack right so so this this slide is changing and now the current server pipeline of 860 million relates to the whole business i mean the memory racks and so on and so so it's the the whole segment right it is okay and now for the servers and gpu and clusters uh that's almost 12 000 gpu units it's not a big number and out of that 80 of those are related to nvidia right so that that's how i should understand this like that's how i understand it as well okay and the rest is probably amd or something yes i give you an analysis for the six months outside apple my second supplier is micron

micron is mainly is mainly selling uh memory for servers and then ssds much lower ssds yeah so this is the answer yeah if this is my second supplier biggest supplier of course AMD is number three, number four, number five, depending.

Yeah, I mean, I understood this that way. I mean, I remember the slides from Cyprus. I understood that Micron is second one to Apple, right? So I would also have the same question as Richard previously. I mean, among the 12,000 GPU units, it's not a big number, but still it's probably bigger. how much of that is like H100, B200, 300, GB, I mean because the prices of those those Nvidia chips are much different right so the value of those contracts would be much different based on older GPUs or newer GPUs so actually it would be a kind of important for us i mean to to to know this segment better to to maybe analyze this segment better if you could for the future in cyprus with the right people yes like the vps

for these product lines like marek like yuri like sergey as well but especially the people who are dealing with it every day so i think it's important as part of these meetings we are organizing every year a to continue every year maybe to be more focused on this type of business because this helped a lot of people understand this business better and grasp more what's happening what's happening in the ecosystem why you why nvidia and you why you know but you need the right expertise to answer a lot of those detailed questions yeah it's very detailed but it's it's very interesting I'm not an Nvidia technician licensed but we have a lot yeah okay thank you but if you get an analysis of my of our top five suppliers that will give you the answer and you split that analysis by micron SSDs and micron memory for server you will understand and I will give you the answer.

So it's Apple, Micron and the...

Then say AMD. And people like SolidIMS, K-Heinix before, are following Western Digital, Seagate, After. These are the big suppliers.

Mostly on the server side.

That's why they grew so quickly to top five, top six.

Thanks.

Not big sales. It's doing quite well. It's tough because you have a second distributor there. We are the second distributor to CORE. It's tough. It's not affected by Iran at all.

The second distributor of APRO.

CORE was there and then they gave a second distribution to CORE. So there is a lot of fight to get market share and save some money to make profits. But it's challenging, but we love challenges. because south africa is not between these biggest 10 countries we are growing very quickly on the ai you see that's why everything is blown up you know seasonality is blown up split by countries is blown up where was netherlands a couple of years back where was taiwan a couple of years back everything changed so the fact that they are doing well but they are not doing so well as the rest of the business is exactly what we are describing here yes so south africa is doing well they got good sizes remember we were saying we can do 50 million or 100 million or 150 million

we are doing quite well don't be sorry that's why i'm here yes okay so on the memory market because there were there are a lot of headlines what's happening there and there about like a Chinese players coming in maybe for this market so I mean would you if it's possible would you start working with this CXMT that the company that is producing DRAM in China there is a second one Chinese producer but it's about NAND memory but would you consider such? Why not?

We are a technology distributor. If their product becomes so famous and wanted by the market why not?

Okay and just yeah I remember one last like technical question because there are NAND, DRAM and this HBM that it's inside the servers i mean with this hbm do you distribute this kind of memory or it's just inside the server you don't deal with that at all because i i didn't find that on your presentation i just saw around it's not so big for us yes it's in the server it's in the we don't buy directly so it's not a separate line yeah okay thank you but when it comes to memory we have all the suppliers we We have the Kingston, we have the Samsung, we have all the boys.

All the known ones for servers, we have them as suppliers. That's why the preference for us is to be in the ecosystem. We don't have just Kingston and somebody asks for Samsung and then you're out. Then they are looking for another technology distributor. So that's the beauty. One stop shop.

Do you buy a lot from, I don't know, Samsung or Heinex, for example?

SK Hynix became Solidime now, the new name. We have them as top five suppliers. They purchased a part of Intel a couple of years back and they grew very quickly with us. Very significant level.

So lower than Micron, but still very material.

Working capital and cash flow, I think we touched it a little bit before. We are continuing to improve cash from operating activities by improving management of our working capital cash to cash cycle has significantly significantly decreased because customers are paying on time because we don't have enough inventory in the warehouse especially this ai business is shifting quickly the inventory out of the warehouse so this is improving the cash flow customers pay early even to get product and make money So H1 was the first time in history of this group that managed to generate a positive number. And to this extent of $77 million is unprecedented. And if you look at the cash position on undercurrent assets, we had more than $300 million cash, first time ever, with net cash position of $220 million. It's historic. This has never repeated itself. Again, having in mind the seasonality. Supposedly, this is the slowest quarter, the slowest pace on working capital movement, and still we manage to stay very healthy. And the election I mentioned earlier has to do with cash flow as well. If a deal is, say, 3%, not 3%, 4% or 5%, but with a positive cash flow for the company, we may elect, and we elected in Q2 to take most of this, if not of all those deals. so working capital is doing quite well very healthy for the company because this is the main source of us being able to drive increased sales we didn't grow debt by half a billion to grow the sales we grew we improved working capital as a result of that the debt utilization is very low very healthy as a ratio to equity end of june we had actually zero excluding factory we had zero and including factory we had actually negative but we don't have any debt and as i said the equity is growing end of june we had 400 million of own equity so i think we are well prepared to continue with this growth or even accept higher the growth on the top line to continue dividends as well if this is the cash flow situation of the company yes because when you grow 80 percent you have to assess whether you need this money to grow and forgo growth is not an easy answer but we elected to improve and we are improving given the shortage this working capital management therefore we continue paying dividends actually we pay more dividends last year is the first time we paid more dividends uh ever the same is lotus us yes i don't remember everything but this i remember yes yes we will continue doing that if the cash flow allows and it's so healthy like it is today so talking about dividends that's I think the last slide, this is the nine years in a row continuing to pay dividends and holding a policy, a dividend policy, saying that we can pay up to 50 percent of our net income as dividends to our shareholders. We continue doing that. And if the cash flow allows, we will continue paying these percentages as we grow bigger in profitability.

Thank you very much. i'm ready for more questions maybe it's a bit silly but i wanted to understand it better so if you buy the hbms from micron directly right for example from micron then what is the supplier of gpus because not nvidia directly but what company then intel intel amd super micro or something super micro have the server okay the nvidia technology yes dell yes okay so we buy the hbm directly from the uh from micron but the rest purchase from these dell and other oems okay and the one more question for the uh receivables uh write down or uh allowance uh as you mentioned provision yes provision so i'm excuse me yes provision of course you're being very prudent which is great i suppose especially in such successful quarter but on the other hand from what i see it's been already 4.4 million in the first quarter now nearly 4.5 and after first quarter you mentioned that it mostly concerns some older projects and hopefully we will not see further provisions so what what went wrong then that we see more provision in the second quarter as well what went wrong is we are running more business

running more business that means taking more risks we are having a three billion company in the six month you allow credit to customers so they don't sell Well, on prepayment, sometimes you do. That takes additional credit risk, and we elect to take it. That's a business decision. Most of the customers are credit insured, but sometimes we may give, you have a two million credit line, insured credit line, you may give three million to the customer, and sometimes you have issues with the customers. Therefore, if you are a prudent, conservative company, you make provisions. if these provisions look unnecessary towards the assessment end of q3 and then end of q4 you may release the provisions and create additional profit for the company depending on the outcome of these problematic issues you're facing so it's a good practice to do it quarterly now that's clear but to be clear as well so first quarter was some older issue and now we are talking about the more likely fresh receivables being subject to a provision some fresh receivables take provisions to be on the prudent side some of it is historic issues that your 2025 not historic issues that you continue to assess if they need more provisions you make more provisions if not you don't make any more provisions or even release the provisions but to be clear these are two different topics like what happened the first quarter and the second quarter not one customer one customer comes back from 2025 we did provisions in q1 and q2 for this customer the same one the same one but the rest of the provisions are general provisions and could you tell how much is attributed to this certain customer we have some big customers we have some small customers all together is 4.4 yes okay but compare this uh 4 million 4.4 million provision to the 3 billion or 1.7 billion turnover in Q2. It's very reasonable.

Generally, you expect these provisions to be more common in the future because of the business growth?

Common, I mean, it's part of the expense. It's part of the cost of running business on the credit side, yes. You have credit insurance costs, significant costs, underselling expenses. You have provisions of bad debts also sitting under selling expenses.

No, no. My point is that from analytical point of view, we shouldn't treat it as if one, but rather it's more, it should be, maybe not expected, but it's regular.

We always had credit issues throughout the 36 years of history. But we never had 3 billion in Q2 in six months. We are a different size company.

So the 2 million of last year is double today. yes no no but for whole half year it's 8.9 because of specific issues we had for end of 25 okay okay and half is regular okay okay thank you you wanna you have questions um so if you are looking at the market the data center market uh and the the geographies that you're currently in and you're trying to enter do you see the acceleration deceleration or stabilization of the number of data centered projects that are to be to be

announced to in the nearest future overall we see growth not necessarily every month month in month out you know out of this 600 plus million we showed the last two months you know 40 50% of it is AI server and server components that will not necessarily continue especially in the slowest months of july and august summer holidays but we see that the future is there that this business continues to grow yes although prices has gone so have gone so high though shortage into the market by suppliers especially memory we still see growth and then at the geographies that you are present and you are planning to enter what's your current market share and can you on what intern in servers in service yes kazakhstan it could be i don't know because of this kazakh telecom that was the biggest ones we got everything out of this project for the last two years on this project we are 100 percent on overall kazakhstan i don't know this is why i'm asking more about the whole geographies that you are in and you might be entering just the nibius projects are billions and billions of projects yes they are building everywhere in the globe so so the approximate rough approximation that let's say that 10 gigawatts of data centers are to be built in the nearest future in in a region and there is a 10 billion per gigawatt dollars 10 billion dollars per gigawatt of servers so you have much below one percent it's not only us in the in the system but you can see the announcements of this tier ones big names of which i mentioned earlier and see how many billions they are declaring they will invest into this business for the next years. It's unprecedented figures. So I have no reason to believe, we as a company have no reason to believe that this business will stabilize or decrease in the nearest future. You can see the announcement, these public announcements of Nibius, of Meta, of Google, of all these posts. Microsoft. They are declaring their their cutbacks on this AI. So I don't see, I don't see slowdown.

I knew that the company is not publishing projects of finance and so on, but I tried to make some assumptions of possible profits, net profits this year. and it's 172 million dollars and it's a good number this is my question do you have bigger prospects i wish i knew but you have such a budget it's a good number 172 is a very good number we We did already 80.

There is a lot of question marks. I mentioned price, I mentioned supply constraints, shortage, possibly new players into the memory business coming from China. We'll see. So far so good. Business is there, we are running this business. We are ready for further growth when it comes to financial strength of the company. That's what we care. The basics. The rest will come. Like it did come for the 6 months, 3 billion turnover, 80 million profits, we're doing the right things. The market will decide. Okay. That's a good number, 172, I like the number. I thought you would ask me also 172, what part of that relates to dividends, but you didn't ask the question.

It's a company with a model which needs money, needs cash.

It's coming internally. It's internally driven cash flow, where it is working capital management.

Yes, but…

Beauty. Because you're not exposed to external finance. Because there you may have limits. Now generated internally, beautiful. You have the ability to pay dividends. Say guys, I will not pay you dividend this year because I'm growing 80%. You will not like it. We will not like it. We are all shareholders in this company. So the company is in good financial strengths. Not only income statement, but cash flow, balance sheet, cash flow.

Congratulations. Thank you. This is fantastic records.

We are doing our utmost the last 25 years in the company to get there. Thank you very much for your questions, for being here today, for bearing with us so many Crossing fingers, we continue delivering good profitability, good cash flow to you guys. Thank you for being shareholders of this company, for following up on us. we appreciate this thank you guys