Invisio Aktie

Welcome to the conference call. [Operator Instructions]

Now, I will hand the conference over to the speakers. Please go ahead.

Thank you, and welcome to our presentation of the First Quarter of 2026, which we characterize as our best first quarter so far. As some of you will know, our first quarter is sometimes a little bit soft beginning of the year, and so has been the case also this year, but I still think we have done pretty well with good growth in both revenue and order intake despite the prolonged U.S. government shutdown that we have seen during this quarter.

We've seen good order intake across most of our key markets. And we will get back to, of course, some of the details here. Our gross margin was a little affected in the quarter related to some donation-tide sales at a lower margin, and that also directly impacts our EBIT margin. But when we leave the quarter, we are sitting with a strong order book that underpins our revenue for coming quarters.

Now again, the first quarter was our strongest first quarter ever. Revenue totaled SEK 430 million and somewhat higher in comparable currency. So this gives us a growth around 30%. This comes, of course, on the backbone of our very strong order intake in the last quarter of 2025. We see a very high interest in our new products that is also reflected in our order intake, an increase of 27% compared to last year. And we've seen a very good continued inflow of small and medium-sized orders. And again, as we've said several times, we see a trend towards higher number of product items per order as we are, to a higher degree, selling complete systems rather than just individual products.

So all in all, a good start to the year. Our order book stands at around SEK 750 million at the end of the quarter, which we, as usual, believe we will be able to deliver within the coming quarters, normally within 6 to 8 months, so the majority to be delivered in second quarter and third quarter of this year.

Now our gross margin was a little bit lower. And this level is primarily because of sales to a customer for onwards donation to a third-party. And there, we accepted a lower price. And I would say, without this, we would have reached a gross margin close to 60%.

And as we've said also several times, the growing share of new products also as we advance further into 2026 will contribute positively to maintaining healthy gross profits over time. We have a variety of new products coming during the year that I will get back to.

OpEx investments follow our plans as they have done for many quarters. We increased OpEx with 15% in Q1 versus the same period last year. And operating expenses is primarily personnel costs in R&D, in sales, in operations and in other parts of the company, and is related to the market activity levels that we see. Some of the R&D work, of course, related to future opportunities that we see with certain customers or markets and sales also related to building on the current sales team so that we can take advantage of the opportunities that we see in many markets. So at the end of the quarter, we are around 330 employees in the group.

Our margins are due to our business model with outsourced manufacturing, margins fluctuate with our gross margin and our OpEx. Margin was 9.2%, and this is in line with what we have seen previously in the first quarters of years. And this time, it is related to the slightly lower gross margin. As you will recall, our target is that operating margin EBIT should exceed 20% over time.

And as usual, we recommend that you look at INVISIO not 1 quarter, but at least 4 quarters and at best, 18 months rolling, so you get a better picture of the business development as each quarter can be very volatile. On a rolling 12-month basis, today, we are at 17.5% EBIT margin.

Now inventory has, for a long time, been a competitive advantage for INVISIO and will continue to be so. We also expect inventory levels to increase somewhat over time, partly because of the many new products we are launching, but also to make sure that any geopolitical dispute or activity will not have a short-term impact on our ability to deliver. So our inventory consists of standard products, but it also consists of key components that we deem necessary for the business for a certain period of time.

So -- and we have seen on several occasions also related to near-term activities that fast deliveries is a significant competitive advantage for us in the current market conditions. So we will continue to stay at this level and even somewhat higher.

Yes, normally not much to say about cash flow. Operating activities, SEK 48 million lower than last year, but this is always -- almost always related to when we invoice and when we receive payment. We have a very smooth system where we sell with 30 days payment terms, and we also have the same terms with our suppliers. So it is all about timing for when we invoice and when we receive payments.

Our Board of Directors have proposed a dividend of SEK 3 per share. We have our Annual General Meeting later today, where the meeting will decide on this proposal. Our objective is to pay out 25% to 50% of post-tax profit in dividends over time. And with this proposed dividend, we are at 48% for the last 5-year period, so within our objectives.

So from an operational point of view, from a business point of view, what we have seen during the quarter is very happy to report the first deliveries of some of our really key products, the new INVISIO T30 headset, which we know will address very large user groups. The INVISIO Link wireless Intercom that strengthens our total product portfolio, and this is the solution we have sold to the U.S. Coast Guard. And then our H Series, the data hubs that enables integration of multiple products and functions on body-worn soldier systems. And this broader offering really strengthens our ability to meet the customers' growing demand for complete and integrated system solutions. This takes us to the next level.

Now, manufacturing and deliveries is slowly ramping up, especially on the T30. It takes a little bit of time in the beginning to get up, but we are very focused on making sure that we can meet the anticipated demand for these new products and especially the T30, where we have delivered the first solutions this quarter.

As we said, there has been a prolonged U.S. government shutdown, especially in the Homeland Security area. It is over now, but it did impact our order intake in the first quarter. We expect these delays to be recouped during the year. So hopefully, we should be seeing solid order intake also from the U.S. side before the end of the year.

Now, as you might recall, in the fourth quarter of '25, we entered into a very important agreement, strategically important with the U.S. Coast Guard. It is our first major contract in the Maritime segment. And apart from the contract itself, it also opens door to other U.S. Coast Guard units, but also Coast Guard globally and other maritime organizations globally. We have already seen great interest from other organizations to test and try out the solution here, and we expect this to be a very significant order contributor to our business for a long time to come. It is really a unique solution that we are proposing here.

So not much has changed. We are still in a very uncertain political landscape that continues to keep defense and security high on the agenda. And adding to that, there is a fundamental need for modern communications equipment in many countries that needs to be added or updated. And these factors lead us to expect continued high demand in '26 and for many years to come. So a little bit uses business as usual.

And with that, I conclude the presentation for today, and we open up for questions, please.

[Operator Instructions] The next question comes from Adrian Elmlund from Nordea.

A couple of questions for me, please. I think 3 of them. I'll take them one by one. So firstly, I think the major thing here is obviously the gross margin. Is it fair to assume that this is completely a one-off and that you will have no effect of this in Q2?

Yes, it is a one-off in Q1, and there is no ongoing activity related to this in Q2 or other quarters. But as you know also well for many years, our -- even our gross margin can fluctuate because we are selling in different ways. Sometimes we sell direct, sometimes we sell through a system integrator, sometimes through a law enforcement reseller. So we have a gross margin that can vary greatly from 50% and up to a lot higher. And it is the average of all of our business that gives us that number. So normally, our gross margin has been around 60%, but it will fluctuate given some of these business characteristics. But this particular one is a one-off, yes.

Yes. Right. Fair enough. Another question that I have is regarding the U.S. government shutdown. I kind of -- it sounds like it has resolved, if I'm not mistaken. And should we expect any form of catch-up effect? Or do you only think that sales and perhaps order intake will normalize? And adding to the order intake here, can you sort of comment on how much the order intake in Q1 that came from Europe versus U.S.?

I would say the majority is definitely coming from Europe in Q1. In terms of catching up and so on, I would say, yes, I think it will catch up because the budget has not been reduced. On the contrary, the budgets for the U.S. administrations are higher than they were last year. So I would expect the business to definitely catch up in the coming quarters. How fast that goes, it's always hard to say when people return to work after a period of time, but we expect to catch up in the coming quarters.

Right. Last question, if that's fine. Just if I'm not mistaken, the T30 headset, it's targeting larger volumes, right, than you normally sell. You're targeting green army soldiers basically. Can you comment on the kind of beginning here that we've seen in Q1 and the volumes expect for Q2 and onwards? Are these for green army soldiers or kind of special ops still?

In the beginning, it is a little bit of both, test units for armies and a little bit larger volumes will be expected for special operations going forward. And we will continue to increase our output over the coming quarters so that we can reach basically any level that is needed at the end of the day. But it will take us a quarter or 2 before we are fully up and running in high volume.

The next question comes from Hjalmar Ahlberg from Redeye.

I'll just start with a follow-up on the last question on T30, regarding ramp-up of production. I mean, has that been a limiting factor that you have not been able to ramp up? Or is it more like that you're planning that in line with the kind of expected demand that you see in the coming quarters?

No, it has not been a limiting factor. This has been according to plan. We know that the ramp-up phase is going to take time. We're also at the last phase of the test -- the internal environmental testing, as we call them, of the products and everything has to fall into place. And in the beginning of a new product, it always takes quite a bit more time in manufacturing.

So as we now get volumes up, the time each headset takes to manufacture will go down, and that is a process that will continue over the coming quarters here. So this is a quite normal ramp-up phase for us. But we are, of course, very, very focused on the fact that we expect this to be a high-volume product, probably higher than any volume we have seen before.

Understood. And another question. I mean, if you look at the kind of end users for your products, I mean, I guess, look at radio demand, radio deliveries or vehicles, I guess this has been asked before. But do you see anything new in terms of the broad market that indicates that you could see growing order intake in the coming quarters, I mean, like budgets and so on or is that further out, maybe?

It's hard to say because it's a little bit different from country to country. So the consolidation is a little hard to do. We are seeing signs of certain countries where the focus on soldier equipment is great now. And other countries where they are still focusing on vehicles and other types of things. So -- but there is a lot going on and sometimes it's very hard for us to estimate the timelines. We can see that a process is ongoing, but it's hard for us to know whether the process will finalize in this year or into next year and so on. So -- but it's definitely in progress.

All right. And then also on your OpEx, I guess it grew maybe slightly less than expected maybe, but -- or if you look at the last quarter as well, but you're saying basically that it's in line with expectation. But do you see any -- I mean, if you look out the next few years, do you think it will continue to grow this trend? Or do you see it flattening out, giving more operating leverage if you look longer term?

It's hard to say also because we are constantly being introduced to new possible product solutions that we could make. And it's a constant sort of decision-making for our part to decide which new products will we start looking at. Does that mean we can do it with our existing resources? Do we need more resources? Are there market activities that will lead or give us a need to hire more salespeople to be able to cope?

So it's something we constantly evaluate quarter-by-quarter. But as I've said before, I do believe that the growth in revenues will be greater than the growth in OpEx over time. But we are in a situation right now in the markets where there is a lot of things going on, a lot of uncertainty, and therefore, it's very hard to keep straight lines. So we are quarter-by-quarter evaluating both our OpEx side and the revenue side.

I see. And then just a final question on your maritime, what comes from new maritime customers. Do you have any kind of expectation or a guesstimate on the time frame from test orders to volume orders for new customers in this segment?

No, not really. But of course, it does take time because we are in a maritime environment, you are on a boat environment. You need to, in each boat type, find out what the installation should look like, how the usage scenario should be and so forth. So -- but on the other hand, the potential is really great.

The next question comes from Daniel Thorsson from ABG Sundal Collier.

Yes. Just a quick one first. I don't know if you mentioned it, but how large was the donation delivery in the quarter?

We don't mention that. That's confidential. The only thing I said was that it impacted the gross margin to an extent that the gross margin would have been 59%, 60% without it.

Yes. I see. But okay. The other way then, can you say roughly what the gross margin was on that order? I mean, is it 10% or is it [ 40% ] or...

It's closer to the later. It's not 10%. It's more -- it's closer to -- yes.

Okay. I see. That's fine. And then secondly, that could affect gross margin. Have you seen any rising memory prices affecting your input costs or other spare parts in the products affecting the gross margin negatively in Q1? Or is that something that could have an impact in '26?

Not yet. No, we haven't seen that. And as I've said, we are also very, very diligent in keeping long or large inventories of long lead time components and those are the components that we consider to be at risk for whatever purpose. So I think we are handling this well. And here, we have the advantage of working with very large OEM manufacturers that has good insight into what happens on the component markets and also have the buying power to make sure we get the benefits of that power. So no, we have not seen any impact.

Clear. And then finally, on the U.S. Coast Guard here, the SEK 25 million initial order we got half a year ago, roughly. Has that been delivered now in Q4 or Q1?

Yes. Fully delivered.

Okay. Perfect. Have you got any follow-up orders in Q1 that you just haven't announced because they were too small?

No, no.

Okay. Related to the... I see. Okay. Clear. And what should we expect for the full year from U.S. Coast Guard? Have you set any ballpark figure, like USD 100 million or something like that in terms of orders?

No, not really. Your guess is as good as mine, but the contract is for 10 years and USD 100 million, so divided by 10. Yes, anybody's guess.

The next question comes from Finn Kemper from Cantor Fitzgerald.

Congratulations on the strong Q1 to date in revenue terms. I have a question regarding the order intake. I understand that defense orders are inherently lumpy. But I was wondering if there's anything specific in the Q1 pipeline that maybe slipped or got rephased. And maybe you can give us some flavor around how you see the order intake trajectory shaping up into the second quarter?

And then maybe of that question regarding the European tender pipeline, maybe you could update us on the activity level that you're currently seeing and decision timing, so what we can pretty much expect for the remainder of the year?

Yes. I would say for -- in terms of slippage in Q1, the only thing has been related to -- or the major thing has been related to the U.S. government shutdown. So that has definitely delayed order intake in the U.S. And as I said, we expect to be able to make up for that in the remainder of the year.

In Europe, it is the usual fluctuations between the quarters because as again, the customers, unfortunately, don't care too much about our financial quarters. So they make their own decisions in their time. I think though that without having any real proof or anything that I can communicate around, I think there are customers expecting waiting for our T30 to be fully released and for them to have enough samples to evaluate and therefore, holding back some orders until they are able to place them on the T30.

And because up until now, we have a limited amount of products available, we have limited amount of samples available for testing. And once that number goes up and the customers have a little time to evaluate, I think we will see a lot more orders on the T30. But the customers need to have them in their hands and they need to test them for a certain period of time. But this is definitely a product that we have high expectations for.

Okay. I understand. And I've seen that the U.K. MOD's land environment technical communication framework opened this year. I mean, can you confirm that INVISIO is participating? And maybe how can you see the timeline developing for the potential first call-offs?

I mean we participate in, I would say, almost all, I can't think of any tender or market activity related to our product category that we do not participate in. So yes, we do participate. The timelines, I cannot tell you about because I really don't know. They are, as always, uncertain or not well defined. So I will not give timelines to any activity we do because we know that they will be moved around. Sometimes they will be delayed, sometimes they will be moved forward. But we do not give any expected timelines on any of the activities we work on.

All right. Maybe one last question on capital allocation. I mean you have net cash on the balance sheet. You spoke about the dividend already. You had a share buyback at the end of last year. Do you have any, I mean, capital allocation priorities maybe around M&A in adjacent technologies or geographies, if you can speak about?

I would only say that the company has a possibility to do a share buyback. We have possibility to do M&A, and we will also spend some of the money on dividends if approved later today. And then on inventory, as I said, this is a very important part for us to be able to manage the business efficiently and win business in competition with others because we have a great inventory situation. So I would say, yes, these are the 4 areas. So we will consider all of them.

[Operator Instructions] The next question comes from Yiwei Zhou from SEB.

Lars, it's Wei. Two questions from my side. Firstly, I just want to follow up on this gross margin impact here in Q1. As I understand, you also had some donation sales previous years. Is there any particular reason why the margin dilution is such big in this quarter?

No. It varies a little bit from customer to customer, country to country, how it's done. And sometimes even with the normal business, sometimes you have a customer who is telling you that I have a budget for this amount of money. I need this amount of quantity. Can we do business? And sometimes we say no and sometimes we say yes. And in this case, we said yes, because we believe that this was still a good business for us, even though that it is a little lower margin. It also gives us a good goodwill with customers and countries, and there could be many reasons for this. So yes, I would say there was no particular thing here more than making ends meet and having a happy customer.

Okay. And just want to also ask on this topic. So if you're looking at the timing of those donation sales compared to last year, are they following the same pattern?

No, they are random. They have been random for a long time, and they will be. And donation sales comes in many different shapes and forms. As you know, there's also related to the U.S., something called foreign military sales where the U.S. will either donate or sell to different countries under different ways and forms. So these comes in many different forms and shapes. So it's very difficult to generalize around this.

Okay. And another question for the U.S. market. I mean, besides the partial government shutdown, any structural change in this market? I mean, we got that historically has been some sort of local -- small local players being present for many years. Are you seeing them being more proactive and winning customers?

No, I would say -- I would characterize it as being status quo. It is still the same market. Of course, all markets in the world, including the U.S., is more active in terms of looking for new solutions because of the general political situation across the globe. So -- and I think also in the U.S., the administration or the government has been proposing very large increases to the defense budgets going forward. Whether those will be adopted, we will need to see, but there's definitely expectations to a strong defense budgets going forward. And that, of course, will mean that any competitor in the market will try to get as much of this as possible. But there has been -- there's no structural change. There's no new entrants or new -- at least not to my knowledge.

Okay. I mean when we're looking at some countries in Europe, the military procurements tend to favor the local players. You historically have been sort of very strong in the U.S. I mean, now given the geopolitical tensions here, are you concerned about some of the U.S. customers, they could also switch to local players?

No, I don't think so. And I don't think it will happen either in Europe in general. I think we are still in a niche market for soldier protection and communication. And I think here, in niche, it is about performance. It is about providing the best possible solution. And then, of course, as part of what we offer, due to the fact that we have a very large network of manufacturers, we can actually offer manufacturing in I would say, probably 10 countries by now. So in many cases, that would be a benefit. We can offer manufacturing in the U.S. also if that is needed or in a handful of countries in Europe and so on.

So I actually think we have a competitive advantage compared to some of our competitors because none of our U.S. competitors have any manufacturing in Europe. So if they were trying to get into Europe, they would be shipping from U.S. manufacturing base. So I think we are in a good position here with our many manufacturing partners.

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

All right. Thank you all very much for calling in and listening in and talk to you again after our Q2 report. Thank you.

Welcome to INVISIO's presentation of the Full Year Report for 2025. [Operator Instructions]

Now I will hand the conference over to the CEO, Lars Højgård Hansen. Please go ahead.

Thank you. Hello, everyone, and welcome to our 2025 Q4 and full year presentation. We chose to start by showing you a small video on INVISIO and who we are because we think that the company has developed tremendously during 2025.

We are entering '26 with a brand new product portfolio. We are entering with a number of new frame order contracts and new customers in our package, and we are ready to serve many of the countries that are looking for solutions rather than products in order to be able to ramp up the military capabilities over the coming years. INVISIO is the clear market leader here, and we are definitely ready to help our customers with what is next.

So many of you have already seen the numbers released about an hour ago. It is, of course, a quarter and even a year that we are very proud of. We had a tough Q3 with some delivery delays. And I think everyone in the INVISIO network has come together tremendously in Q4 to show that this was a mistake. This was a one-off and that we can do a lot better.

So, I think we have performed very, very well in Q4 on all parameters. It is our strongest quarter ever, despite the fact that there was a prolonged US government shutdown and that we continue to see Swedish krona gaining momentum, especially towards the dollar.

We saw a strong order intake across all key markets. Our gross margin is still stable, and our OpEx is driven by continued but controlled investments to be able to take advantage of the opportunities we see in the markets. And our high sales, as we see in our scalable business model transforms into high EBIT margins.

We entered 2026 with a strong order book that promises good revenues for the first half of the year at least. Operationally, we saw several new developments. We had a new frame order agreement with the Dutch Defense Ministry that is for five, with another two years optional. In addition to that, we had an agreement with the MOD in Ireland, the Irish Defense Forces, where there is a framework agreement through a radio manufacturer, but the first firm order was for around SEK 120 million.

We had an order for almost SEK 200 million for Intercom and our dismounted soldier systems from an existing European customer. And in order to take advantage and really benefit from the many opportunities we see going forward, we have made a number of changes in our senior management team that I will come back to.

So on the other order intake, very strong in Q4, SEK 660 million, which is the highest ever if we take the order last year with the radios and don't count the radios, then this is the highest we've seen. And for the full year, also almost a little more than SEK 1.8 billion, also the highest as we disregard the radio order last year.

So, what we see is also a clear trend, again, that our customers really want us to deliver full systems, not only individual products, but take care of a full category and therefore, deliver more products as part of the system, which also increases the average order size for us. And we, apart from the larger orders, we continue to see a solid inflow of small and medium-sized orders.

So we enter 2026 with a very robust order book, SEK 850 million. There's a little bit left of the third-party radio order, but the majority of the order book is something that will positively impact our deliveries in the first half of 2026.

Our revenues in Q4 were record high. It was the strongest quarter ever despite the US government shutdown and the krona. Our revenues were almost SEK 100 million higher than same quarter last year and actually a bit higher if we look in comparable currencies. And for the full year and excluding the third-party radio systems, we actually grew by almost 10% in comparable currencies. So, we are quite satisfied with 2025, also remembering that the growth between '24 and '25 was 46%.

So, the gross margin continues to be stable. The gross margin is still a little bit influenced by tariffs and the impact of currency conversion. But all-in-all, it's not been too bad. So, I think the growing share of new products in our portfolio and especially also now where we go into '26 and the number of new products are on their way to hit the market, we will see a positive contribution from our new products to maintaining a healthy gross margin and gross profit.

In our OpEx considerations, we have been following our investment plan based on market activities and opportunities for quite some time. And this is also the case in '25. OpEx increased 13% in Q4 and for the full year, about 16%. This is all in line with the plans we have and the investments we make in products and in sales teams to be able to address customer interest and the opportunities that we see.

We have increased our team with about 40 people net in '25. So, we are around 315 people in INVISIO. And then, of course, many more with the ones that work with us with our long-term partners and suppliers, both on the sales side and on the manufacturing side.

Strong sales is because of the outsourced manufacturing model, something that automatically supports a strong operating margin, which was almost 33% and for the full year, 18%. So again, this is related to some of the investments we have made throughout the year and that we will continue to do to make sure we can take advantage of all of the investments we see in defense capabilities in Europe over the next 5 to 10 years.

And I think the first step for us has also been to update our operating margin target during 2025. So, our new target is to achieve an average operating margin of at least 20% per year over time, which is in line with the ambitions we have for the coming years.

Our inventory is still strong. We have inventories in the vicinity of SEK 300 million. It can vary up and down. We keep significant inventory, not only finished goods, but also components, and this is a competitive advantage we see that we are able to promptly deliver larger volumes and really work with our customers in these times where it is a bit volatile and sometimes we get information about available budgets at a very late stage, and then we are able to act quite quickly on that. 

Our inventory is mainly standard products and components. And I would expect this to be a competitive advantage even further. And I think the inventory might grow somewhat in '26 when we have a lot of new products coming into the market, and where we quite quickly need to establish a good inventory situation so we can deliver on the new products like the INVISIO T30 headset and the new INVISIO Wireless Link, the data hubs, and everything we have coming out to the market now. 

Cash flow, not much to say about that, strong cash flow both in Q4 and for the full year. The differences that we see here reflects the large increases in trade receivables that we had in December '24, and then that was paid in the beginning of 2025. And our cash and cash equivalents at the close of the period was about SEK 400 million. So, strong cash flow position. 

Our Board of Directors proposes a dividend of SEK 3 per share, up from SEK 2.3 from last year. And the financial objective that we have is to pay between 25% and 50% of our profit after tax as a dividend. And this is in line with that proposal of SEK 3 per share. 

Now operationally, in Q4, as I said, we received a framework agreement with the Minister of Defense in the Netherlands. And the agreement is initially for 5 years with an option for two 1-year extensions, and it could be worth up to SEK 365 million. It covers the majority of our product solution, headsets, control units, and cables, but also the possibility to serve them with other products. And again, we think this is a way for us to position our entire system thinking with the Netherlands for many years to come. 

We expect this contract to generate significant collaboration and revenues with this customer for many years. And like the same in Ireland with the Irish Defense Forces, where the first order we received through a radio manufacturer was for SEK 120 million INVISIO headsets, multiple control units, and cables. And then our deliveries started already now in the last quarter of '25 and continue into '26. And we expect also here that this is a long-term relationship with the Irish and that we will see further order from this customer over time. 

The SEK 119 million order from a European customer is a customer we've had for some time. So, this is a follow-up order with dismounted soldier systems, Intercom systems and so on for the user. And we have delivered most of this in 2025, a little bit less in the first quarter of '26. 

As we reported in the previous quarter, we achieved a large framework agreement with the US Coast Guard (USCG) worth up to SEK 930 million. This is for the new INVISIO Link with Intercom systems, headsets, control units, and cables. And we did receive the first small order that we are delivering on now. Due to the government shutdown, there has not been further order activity yet, but we, of course, expect this contract to be a major revenue contributor for us in the years to come.

But we also think that this is going to provide us with many new customers in maritime environments and Coast Guard. We already have a second country that has bought units for their Coast Guard as test, and we have several more countries that are very interested in seeing the solution we are providing to the US Coast Guard. And I'm sure this will be a very important category and revenue provider for INVISIO in the years to come. 

Now with strong growth and many more employees, we also, of course, need to make sure that our management team and our organizational structure is up to speed. And therefore, I'm pleased to announce that we have done a couple of changes in Q4.

We have a new position in management where Joakim Birgersson, former Head of Operations, is now taking on the role of looking into our strategy and what we call new growth initiatives. 

Joakim has been with us for a long time. And Roger Kristiansson Skaaby, who has also been with us for even longer, will take over very seamless from Joakim and run operations from now on. Mathias, also a long term with INVISIO, is our new Head of Sales and Marketing in Rest of World. And he is now going to head the sales organization and marketing organization in this region. So, we are all set for a strong 2026 with an updated management team.

In summary, for the full year, there's been a lot of highlights where we have continued to invest in the organization in new product development, in more sales team members. We started out the year by acquiring UltraLynx, we have, during the year, announced a number of new products like the market-leading INVISIO T30 headset, the INVISIO Wireless Link, and many other smaller product solutions as well. We have seen a number of new customers and major orders, and framework agreements like with the Dutch, with the Irish, with the US Coast Guard. 

But more importantly, we see continued high market activity going forward. It has for quarters now, of course, been a little bit uncertain when are we going to see the effect of all the investments in defense in NATO. And it is coming. I think some of these contracts are the first examples of that now it is starting to hit our area as well. And we believe that we are very well positioned to take advantage of these opportunities over time. 

We also, during the year, updated our estimate of the addressable market size, which you can find on our website. This market size does not take into account any of the forward-looking investments. It only looks at where the market is right now, where we believe right now, the addressable market sizes are. 

Last but not least, INVISIO has been moved to the Large Cap list on Nasdaq Stockholm, which is, of course, something we are proud of after 20 years of very diligent and hard work. Many of the employees here are those that have been here for this period of time and have taken us, yes, anywhere from a start-up to now a company on Stockholm Nasdaq Large Cap. 

So, in closing, market outlook, as we said many times, there is a very uncertain geopolitical landscape still that continues to keep defense and security issues very high on the agenda, which means there will be lots of investments into defense and security over the coming many years, and there is a fundamental need for modern communications equipment in very many countries. And all of these factors together lead us to expect continued high demand for INVISIO in '26 and for many years to come. 

So, with this, I conclude the presentation for Q4 and the full year. And operator, we are open for questions, please.

[Operator Instructions] The next question comes from Jakob Marken from Danske Bank. Please go ahead.

Hello, thank you for taking my question. First of all, I need to congratulate you on a fantastic end to 2025 and a very solid report across all lines. If we start on the US shutdown that you mentioned a bit, I mean, can you give us a bit more color on that?

How much did that affect you I mean we can see, of course, in the report quite a big drop in sales year-on-year here in Q4. But I also wonder how much of the effect did you have also on order intake. So, I mean, did the orders come through as expected and it was just the top line affected? Or was it both top line and orders being affected here this quarter?

Thanks, Jacob. I think it has been both. I would say that we have not done a specific calculation, and I don't think that we have sort of thinking that we have lost something. I think also if you look back in time, a government shutdown is not unusual in the US It happens every second year at least. So, it was only unusual this time that it was longer than normal. So, it did affect us a bit longer and especially now in the end of the year. So, but we have always seen that the money is not lost.

So, it will come back once the new budget is approved. And I think also what is clear is that the, both the current and the new budget in the US, but also the ambitions for the US administration is to increase military spending quite significantly. So, I'm not concerned about, again, this is part of the volatility that we have always. But I'm absolutely sure that this will bounce back once we get into '26 at some point in time.

Okay. Perfect. So, then it's fair to assume that the absolute majority of order intake in this quarter was Europe related? Or how should we view that?

Yes, the majority was Europe and Rest of World. Yes, there were some orders from the US, absolutely, but not as much as we could have expected. And it's speculation. We could have, of course, speculated that could we have received a follow-up order on the US Coast Guard contract, maybe, but we don't have any indication on the size or anything. So that's just speculation and for the customers as well. So, but we will see a bounce back, I'm quite sure once we get a little further into '26.

Okay. That's very clear. And my other question was related to Q4 last year being a very, very good quarter and then maybe the market and as analysts overestimated how much that would continue into Q1. Would you say that there's any sort of sign of over deliveries here in Q4 that we should expect sort of a setback in Q1? Or how should we view that do you think?

It depends, of course, how you define setback. But I would say we have SEK 850 million in the order book. And as always, a majority of that will be delivered in the first two quarters plus some more of new orders that we get. So, this is, but I think it has been a pattern over some time that Q1 is a little weaker, Q2 is a little better. Q3 is a little weaker, Q4 is much better. So, a type of S curve, I wouldn't say that the market is like that, but it has been like that for quite some years.

Okay. Yes, I understand, but not maybe the sort of drop in the magnitude that we had last year.

No.

No. Okay. Thank you. And then a question on OpEx. It seems that OpEx growth year-on-year is slowing down a bit here. Is it sort of the pace around 15% we should expect also going forward? Or how do you view the OpEx growth as you talked about adding 40 people net. Is that sort of a stable growth rate on the number of personnel or where do you think you are in '26, '27?

Yes. I wouldn't put an exact number on it, but I think you can see the curve is quite stable. It does variate a little bit because suddenly, we are in a situation where we need three or four more people for a certain project or we find people that we say these are absolutely right for INVISIO. We need to hire them now even though we maybe only need them three months from now or so on.

So, we are quite agile in the way we look at things. And there might be development projects that suddenly pop up where we say, hey, here's a customer opportunity that we need to go for right away, and then we need some more engineers. But in general, as I've said, I expect that our increase in revenues should be higher than the increase in OpEx over time.

Yes. Okay. Perfect. And the last one for me. Just wondering on the Irish contract that you say you are to a radio supplier. I'm just wondering about the gross margin profile, anything we should think about going forward there.

No. No, I think it's part of the normal profile for our customers. There is a variation. And of course, when we sell with a radio manufacturer, we have a lower gross margin than if we sell direct. But then on the other hand, they have done the sales work for us. So that's the trade-off. But in the summary of things, we have a mix of customers and a mix in the way we sell. So, I think this is part of our normal business.

Okay. Perfect. Thank you, that's all for me.

Thank you.

The next question comes from Adrian Elmlund from Nordea. Please go ahead.

Hi, guys. Good afternoon and well done. A couple of questions for me, please. I just want to have a quick follow-up from Tore. Did I hear you correctly saying that you could have seen additional orders for the US Coastal Guards? Is this within the actual framework agreement? Or is these additional orders?

Hi, Adrian, thanks. No, what I said was that we have a frame order agreement now with the US Coast Guard for SEK 900-some million, but we don't know when they, at what point in time they will turn that into actual orders. That will depend on when their boats are ready for being equipped and so forth. So, it's, that's some of the planning they will have to do themselves and see when the boats are coming into dock or into harbors to be equipped and so on. And, but because there was a lockdown in Q4, yes, many were not at work, so it didn't happen in Q4.

Right. Okay. And you kind of said that you expect the company, the number of items per order are evolving into higher numbers of orders per order, and that is, and you're evolving what into a system supplier, I think you call it. Does this really change anything in practice? Is this why perhaps you saw the disruptions in Q3? Like are you growing into a more mature kind of company? And kind of what should we expect going forward?

Yes. At least you can say that, and I think this is also what we were trying to demonstrate in, or we said in Q3 that we are sometimes now delivering systems that consist of many parts up to 90 different items in one shipment. And if only a few of these are not available, then we will have to wait a little bit or for other reasons.

But I think also, if you look at the update on the total addressable markets we have done, a part of that is the fact that the average sales price per user and per boat and per vehicle has gone up quite a lot since the first time we did this assessment of the total market. So, it's very clear that we are selling more per user or per vehicle. And that is, of course, an ambition we have even going forward.

And I think the system approach is really what our customers also appreciate because then they have, most countries today, most customers have so many things they need to buy. They have so many things they need to focus on. And if we can take care of a portfolio, of a category of things for them and just make sure that everything works for them, then that is a huge benefit for many of our customers.

Okay. Another question regarding the R&D costs going forward. As you grow as a company, I assume that you have to spend more in R&D as well. But I think you've said as a percentage of sales might decline. Maybe you could touch on that. And I guess another question, just a follow-up to that one is, how does the pipeline look for new products? Are you expecting anything regarding competition that you need to address as well?

I think in terms of pipeline; we follow our own plans. We look at our own portfolio. We look at our own system again. And last year, we added the data hubs as part of our system. There is no one like, no one that has a portfolio that comes close to the INVISIO total portfolio with the soldier systems, with the vehicle systems, with the Intercom and the wireless Intercom and now the data hubs.

So, all of this package here is something that is really unique for us and that we will continue to expand on. We will continue to add more products and solution to this total system. That's our plan. And we also work extremely close with customers. And in many cases now, for instance, with the new contracts with Ireland or with the Netherlands or with other of our customers, there's no doubt that they will come back to us and ask us for things they would like to have done.

A lot of countries are getting information back from Ukraine from what the Ukrainians are experiencing and how a war is conducted right now. So, a lot of that information is fed back not only to us but also to customers in many countries, and that will eventually lead to a demand for product solutions, and we will be very ready to help them develop that.

And if suddenly there is a new product category or a new type of product or something that they need help with, then we will hire the necessary R&D people to make sure we can respond in a timely matter. So that's why I say that also the R&D side is customer-driven and activity driven. So, we are not shy of taking opportunities when we see them.

And with regards to competition, do you think that is increasing? I think you've said before that it's actually decreasing. Bose is leaving the market. Could we have any update on that?

In some areas, it is decreasing. And I think those that are competitors to us are mainly some that have only one or two products, and they are trying to compete in different parts of the business, not on a system level and so on. So, if we have a direct competition, yes, of course, we have competitors. But again, many of them are local or regional and are only focused on a part of the portfolio that we have.

And any update on Bose that you could give?

No. To my knowledge, they are out of the market, and they have delivered the last issue, sorry, the last products that they have manufactured. The manufacturing is closed. So, it's all about emptying the warehouses. And then when that is happening, hopefully, we can start delivering for those customers.

The next question comes from Yiwei Zhou from SEB.

Congrats to the good results. Two questions from my side. Firstly, a follow-up on the US government shutdown. I was wondering if you are seeing any catch-up effect or pent-up demand into Q1?

Yes. I think there will be, not that I can put any number to it or things like that because that's just the normal volatility of the business again. And it's not the first time in my 20 years soon with an issue. I've seen this so many times that there is a shutdown or delay or whatever. So, I would say it's almost a normal part of the business. So, it's not something that we spend too much time on. We know that it will come back somewhere in '26. So, we're not too worried about that.

Right. Very clear. And secondly, I also got an impression that the Racal growth has been a bit slower than the previous years in '25. I mean you already talked about Bose, I mean, Bose leaving markets, shouldn't we see an acceleration in the growth? So, what was the reason for a sluggish sales here in '25? And what is your expectation for '26?

I wouldn't call it that. I think this is again a normal part of how the business operates and the volatility we see between quarters and years and between product lines. And what has happened in '26 is also that Racal right now is a product brand. It's not a company anymore. Everything is fully integrated into INVISIO.

And in the UK we are now called INVISIO Limited with our new offices in Croxley outside London. So everything is INVISIO. And actually, we don't really care whether the product is called this or the other, but there are certain applications where the Racal Acoustics brand is very well known, which is inside vehicles.

But now you will see that when we sell to certain customers, it will be a mix of INVISIO headsets, Racal headsets, INVISIO Intercom and many other things in one big system. So that will drive sales for all our types of products. And specifically related to Bose, yes, of course, it is an opportunity that they have left the market, and we are quite sure that there will be many opportunities for us in the vehicle market, especially also since we can see now that many of, some of those vehicles that have been ordered in Europe are now starting to take delivery. So customers are starting to take some deliveries of vehicles, and that should pose an opportunity for us for selling the vehicle solutions.

Is it possible for you to indicate or quantify a bit about the Racal brand sales growth in '25?

No, we don't do that. We don't even do that internally because we don't consider it a separate thing. It's all mixed together. So we don't really look at it that way. At least not at a management level, it's not really important to me. It could be that we develop a product here in Copenhagen, and we call it Racal because it makes sense that it's sold to a vehicle. So we are not looking at it as separate lines or separate entities. It's all part of the group now.

The next question comes from Hjalmar Ahlberg from Redeye.

Also, a follow-up on the Coast Guard area. I mean you mentioned that you see some positive impact from other Coast Guards after this order. I mean, how big, how large could this be? And how many have you been in contact with, so to say?

I mean we have been in contact with quite a few, but I would also say there is a limit to how many customers we have been able to address yet because INVISIO Link is still a new product, and we have focused on deliveries for the US Coast Guard, of course, and then samples for some other customers. We have received the first order already from another Coast Guard.

And this is something that will have our focus in 2026, where the solution and the products will now be fully ready in manufacturing, and we can get more units out for testing with customers. And I think it's not only Coast Guards, it will be maritime applications within the armies as well in the Navies as well. But it's also important to remember that the Intercom and the Wireless Intercom was actually also developed for land purposes. So we believe this will be a strong product to sell to Army customers with more land-based vehicles.

All right. Interesting. And regarding, I mean, your kind of growing systems deliveries here, if you look at, I mean, 2025, you launched a few new important products. And looking into 2026, do you think it will be more focused to generate sales from these new products? Or will it also be continued launch of new products this year?

For competitive reason, I will not disclose that, but I would say that we are, of course, having full focus on now making sure that our new products get into the market and we get good sales. I think there are many customers out there that are waiting for our new products to be available so that they can test and hopefully start placing orders.

All right. And also another question, I don't know if you have an answer, but I mean, if you look at the soldier, for example, and the products you deliver, how big kind of, how much projects can you sell in terms of communication equipment to soldier, for example, compared to what you have now? I mean, how broad can the portfolio become in terms of communication equipment?

That is a hard question. There's quite a lot of potential. And I would say that the way things are developing right now, the soldiers are getting more and more communication things and devices on their body and that personal body network of devices is only increasing. And it is, of course, some of the strategic discussions we have, how big a part of that should we try to aim for. But that is a strategy discussion that I will keep for myself for the time being.

The next question comes from Daniel Thorsson from ABG Sundal Collier.

Indeed, a very strong quarter. But I have a question on the gross margin here. Is there a risk that it was slightly better than expected in Q4 and that we should expect going into first half of '26 given that US sales were a small share of sales, and we didn't see the potential negative FX effects and also tariff effect to much extent. And also, I'm a little bit curious around your exposure to memory components and the recent price increases of 200% to 300% last 4 months in the market. Is that something that could hit on the gross margin negatively in the first half of '26?

No. I would say that immediately. No. component parts, of course, yes, there are certain components in the market where prices are going up and so on. But I think we are in full control of what we do. We are very good at forecasting. We are very good at buying well in advance and keeping inventory and so on. So I don't expect that to be more than a marginal impact on us.

And your first question about gross margin and tariffs, no, because the gross margin consists of so many things. It consists of the products we sell, whether we sell them direct or through a partner, whether we sell them to law enforcement or to military and the currencies and everything else. So it's a big mix of a lot of things. So I'm not too concerned. I think we are in a good spot, especially also with many new products coming into the market. And yes, so I don't have any expectations for changes to the gross margin more than the normal volatility.

That's wonderful. And then secondly, on order intake for 2026, do you think it will be strongest part from Europe or North America?

Hard to say. I think there are lots of opportunities in both places. And as I say, the US have indicated very strong ambitions in terms of ramping up their military spending as well. So, and there's a lot going on in the US market. So I expect to see a good market in both the US and Rest of World.

[Operator Instructions] The next question comes from Tom Guinchard from Pareto.

A question on the inventory levels amongst the US resellers. Can you give us any indication of the inventory levels here at the moment?

US resellers?

Yes.

No, we have no inventory there. All inventory is kept at INVISIO.

Yes, yes, but the resellers' inventories in your discussions, what are they saying? Because my understanding is that we've had the delays in orders from the end customer and the US resellers have been a bit cautious in stocking up on inventory as well.

We have no reseller that stocks our products. We do that ourselves. So we have our inventory in Europe and in the US there is none of our customers that has any inventory more than samples. We always ship directly to the end user. We don't keep any inventory with sales partners.

Okay. Perfect. And then a question on the sort of vehicle rollout here. I mean, we're going to, as you mentioned, we see increased volumes going into '26, '27, but we still don't really have the personnel to use the vehicles as of right now. Is it possible that we're going to see higher growth for the Racal branded products into, say, '27, '28 once we have the armed forces actually using the vehicles?

That's hard to say because that depends on planning. I don't think that planning is necessarily done in that way. I think that in certain instances, the planning will be done immediately when the vehicles reach the country. In other instances, it might be that they will first plan for personnel to be able to operate them. And there might be even a third or a fourth version. So that is country by country and sometimes related to what money they have in the budget just now or this year. And it's not necessarily something that they will share with us until it happens. So that's really hard to estimate.

There are no more questions at this time. So I hand the conference back to the CEO, Lars Højgård Hansen, for any closing comments.

Thank you, and thank you all for calling in today and for all the great questions. I would just say that if you didn't see our fantastic movie at the beginning, we will show it now again. Enjoy, INVISIO, what's next. Thank you.

"

"

" Nordea Markets

" Danske Bank A/S

" ABG Sundal Collier

" SEB

" Pareto Securities AS

" Redeye AB

Welcome to Invisio's Presentation of the Interim Report January to September 2025. [Operator Instructions] Now I will hand the conference over to the CEO, Lars Højgård Hansen. Please go ahead.

Thank you, and welcome, everyone. So the outcome of our third quarter 2025 is to a great degree already known since we have published the key figures already some weeks ago. And therefore, I will focus on some of the operational and business highlights in the quarter. It has been a very busy quarter on all parameters. We have seen high levels of activities in all geographies in all customer areas and we saw the results in terms of strong underlying intake of small and medium-sized orders. And with the delivery delays that we announced some weeks ago, this means that the order book that we have at the end of the quarter has been significantly strengthened. Even though we also still see some impact from tariffs in the U.S., we still maintain healthy margins. But the fact of the matter is that this quarter from a financial point of view, of course, is disappointing since we have lower revenues than expected and because of our business model with outsourced manufacturing, our operating margin is doubling and is minus 0 in this quarter.

But back to the operational highlights because it has been very, very busy. And there are 3 things that stand out. First of all, the 10-year frame order agreement that we have with the U.S. Coast Guard with a value up to USD 99 million or SEK 930 million. After the quarter, we also entered into a 5-year framework agreement with the Netherlands MOD, Ministry of Defense with an option for another 2 years. And apart from that, the quarter saw a massive amount of product launches from Invisio in connection with the trade show ACI in London. It is probably the largest number of new products we have ever launched. So, I'll be back to that as well.

Looking a little bit at the numbers. As I said, good underlying order intake around SEK 500 million almost. And on a rolling 12 months, we are at SEK 1.7 billion. So, continue to be good spread across our different product categories and our different user types and geographies. So good mix across the board. And it means that we leave the quarter with an order book close to SEK 900 million. And as usual, the majority of the orders are expected to be delivered in the next 2 quarters, meaning Q4 2025 and Q1 2026.

So, as we have already said, our revenues were impacted by delivery delays. And those -- several reasons for that. One of them being that sometimes our hearing protection solutions are delivered together with the communications radio or together with a certain vehicle and so on. And if that communication radio has a different delivery time from when we expect to deliver, then we are sometimes asked to postpone our delivery so that customers can receive the whole system, including communications radio in one go.

Another reason which is becoming more relevant is the fact that over the last 3, 4 years, Invisio has developed greatly. A few years ago, our core product solutions was a hearing protection headsets with a control unit and a few cables, meaning 4 or 5 products or order lines per user. Now one of our advanced systems, for instance, intercom wireless link can count up to almost 100 order lines. So, there are so many different parts of the delivery -- and this also means that if the customer is requesting a little bit of a change to one of these 100 parts or if there is a slight deviation from any of our suppliers in one of these 100 pieces, then there will be a slight delay. Normally, it would be spread out over the year. But just in this Q3, we had a little bit of a perfect storm where several things happened at the same time. But all in all, as we always say, you have to look at Invisio on a rolling 12 basis and not on individual quarters because of the usual fluctuations.

Our gross margin was still solid in Q3. We did see some tariff costs still impacting our gross margin about SEK 4 million. We also see some impact from currency, Swedish krona towards dollar, especially. But we think, again, if we look over a longer period of time, the last 4 quarters, we are close to 60% gross margin in average, excluding the third-party radio deliveries. And as we have said several times, we think that our broad product portfolio with many new products coming into the mix will continue to support a strong gross margin of the company.

Our long-term OpEx trend has been steadily growing and also now in Q3, although at a little slower pace. Our head count is up 16% this year. And as I think you all know by now this is driven heavily by investments in new products and also in our sales team. We have, in the last 12, 18 months, announced a wide range of new products and additions to our sales team to be able to handle the customer contracts and sales of many of these new products. And most of these new products have not really come into the market yet. So, we expect the starting point to be 2026 for a lot of these new products.

So, on the margin side, yes, very clearly, we have a business model with outsourced manufacturing where revenues are lower, it hits our margins, our operating margins directly. So, we ended up with a minus 1% in the quarter due to lower revenues. Still on a rolling 12, we are at 17% margin at the end of the quarter. Inventory has been a competitive advantage for a very long time and still is, albeit in this quarter, we were not able to compensate with our inventory for some of the delivery delays. But still going forward, we believe that inventory value is going to be a significant competitive advantage, and it is a decision for us to continue to do this because it is standard products, and there will be many situations where customers are asking for deliveries with a very short notice.

Cash flow operating activities, SEK 105 million against SEK 152 million comparable and that decrease is primarily due to the results during the quarter. So not much to comment on that. Now into the more point, our daily operations. So, first of all, the 10-year contract that we have secured with the U.S. Coast Guard, the largest agreement to date and really a company milestone. This is something we've been working on for almost 3 years throughout the company and with a very, very keen and focused effort to be able to achieve this. It is a contract that is related to our Intercom system combined with our new EU Link, wireless solution and headsets controllers and intelligent cables.

And what the customers have told us is that they intend to install it on a large number of what they call small boats, whereas public information is available, they have several thousand. The agreement is worth up to SEK 930 million over 10 years. And we already have received the first small order from last year's project that they will be -- we will be delivering to them in the end of 2025.

In itself, it's a milestone to be asked to equip the U.S. Coast Guard with this very, very advanced implementation solutions, but it's also an entry point for us into a new type of users that we haven't been able to address much earlier. So, we believe that this Coast Guard entry will open doors for us with Coast Guards globally and not only in the U.S. It will also open doors into all military marine applications where our wireless system is going to be very relevant. So, this is the starting point of a new application area that we see extremely interesting all time for Invisio.

Next, the framework agreement with the Dutch Ministry of Defense. Now this is a contract that is for 5 years and includes the majority of our Invisio products including headset control users and intelligent cables. It's according to the customer worth up to SEK 365 million, 5 years with an option for 2, 1-year extensions. We do expect the first orders to be received already before the end of 2025. And if this follows the pattern for many other contracts that we've seen over the years, this will be a very long-term relationship with the Dutch MoD, and we look very much forward to start rolling out the program and responding to the communications needs that they have.

Then over to some of our product announcement launches. First of all, the T30, we have already spent quite some communication time on this in terms of press releases and others. But we still think this is one of the most important product releases in the history of Invisio because it is our first own internally developed stand-alone over-ear headset. We have over headsets before like the G7 but that has more been a specialty application headsets towards real-time environments on the water and so forth. This is -- the T30 is the sort of conclusion of everything we learned in the last 15 years. So, this is really a state-of-the-art communications headsets that are very versatile and can be used in many different situations including those that are not equipped yet with their own communication radio.

We are at the final stages of ramping up in manufacturing. So, we expect that the product will be able to contribute to our growth significantly already in 2026. At the same time, the technology we acquired earlier this year from Olin is now turned into the Invisio H-Series data hubs. And this is a very exciting product area where we are able to connect many different devices that were not originally developed and intended for being connected. Through our data hub, we are able to do that. We are able to transport all the data and power throughout the entire system.

This was one of our most busy areas at a recent DSCI trade show in London. So, we believe we have a real winning solution here, and we believe that the Invisio X-Series will act as a catalyst for development of future innovative and cutting-edge products in the Invisio portfolio over time. So, we also expect this to contribute to our business revenues already in 2026.

Turning to the Invisio Link wireless addition to our Intercom. As I said, this is what the Coast Guard have chosen. And this is definitely a solid product portfolio addition that will be a cornerstone for future growth, and this also attracted a lot of attention. This is a product that is already ready and shipping to customers. So, this is something that will contribute to revenue already in '25 and onwards. So just an update on our shareholder structure where our largest shareholder, [indiscernible] Foundation have increased their shareholding just after the quarter with 2%. But other than that, a very solid and strong base of shareholders both in Scandinavia, Europe and U.S. that has been supporting the Invisio case and group for a very long time.

In summary, as we have said now many quarters in a row, we expect market activity to remain high for several years to come. There is so much going on in especially Europe, but also in the U.S. Modernization needs to continue. We all hear every day in the news how this is urgent and how we need to speed up. The are being increased. And even though we are a little later in the timeline than weapon systems and liner and so on, we can see that there is a high interest for our types of products, and we are sure that we will be part of this ramp-up shortly. So, from this position, we now look forward to capitalizing on opportunities that we see in the market and with a very strong product portfolio, the best ever with some new large frame order contracts in the bag. We are very much looking forward to the fourth quarter and into 2026. So, this was a short summary of the quarter.

I would just mention also, I'm sure there will be questions around the shutdown in the U.S. And yes, short time permit has a little bit of impact on us right now in October, but we cannot expect this to have any significant impact on us in Q4 going forward unless the situation escalates or get really, really lengthy. But so far, no real impact on us. Thank you for now, and I can open for questions, please.

[Operator Instructions] The next question comes from Adrian Elmlund from Nordea.

I just want to say that I think there might be some technical issues with your mic, Lars. I have at least had some hard time hearing, unfortunately. But I'll shoot my questions anyhow and hope that you haven't answered them already. But first off, could you quantify in any way the magnitude of the order that was pushed from Q3? What sales would have been if these orders were delivered in time?

Adrian, I'm really sorry about the speech quality. Can you hear me okay now?

Yes, it sounds better now.

So well, we have not really quantified that because it is in a sizeable, well say, we are talking more than SEK 100 million at least that were moved, but I don't have the exact number because there has been things we were able to move forward as well to compensate a little bit. So, it has been a little bit at least SEK100 million.

And also another question here, I guess. Could you give any sort of comments into the sort of the current trading into Q4? I think that you mentioned that at least the majority of this order should be delivered in Q4, right? And we also -- we have seen the underlying order intake here in Q3 was really strong. I suppose that, that will continue. And I think that you have previously this year said that you expect kind of a stronger end to the year. Does that still hold?

Yes, I think so. If nothing else happens, yes, I think, as usual, the order book that we hold, we should be able to invoice the majority of that in Q4 and Q1. So that I think I can stick my neck out and say that Q4 will definitely be better than Q3.

And kind of a question here regarding the supply chain risk. Do you think it -- is it fair to say that it is systematically higher now following the huge influx in volumes in the tire sector in the last couple of years? Or is this just normal course of business that you have to deal with being in the defense sector?

Yes. I think for us; it is more the consequence of the complexity of having so many more product lines in one system. But in -- we don't have any manufacturing issues. We don't have any component issues, and we still have a large inventory. So, it's more matching the exact inventory to customer orders and then also just the timing of making sure that all products in one system are delivered at the same time. So, it's more the complexity of timing. At the same time, we are also, of course, constantly updating and reviewing our supplier setup to make sure that our capacity is adequate for the business that we see going forward. So, I see this more as being a short-term thing.

But it kind of sounds to me at least that we should expect, I guess, a higher risk going ahead? Or is there anything you could do to kind of mitigate this risk going forward?

There is. And I think part of it is also because we have been balancing deliveries together with making all of our new products ready for deliveries and sales. So, it always takes longer when you are in the ramp-up phase of a new product line rather than just manufacturing what you already have running. So, it is a little bit of a perfect storm that also includes the many new products that we are making ready for shipment.

The next question comes from Jakob Marken from Danske Bank.

Same as the previous speaker. I had some issues hearing you during the call. So, I'm sorry if I ask any questions that you already mentioned.

No problem. I apologize for that.

So first of all, I was wondering if you can say any comments on the geographical sales split. I mean, it's the lowest sales to U.S. in a very long time. Is it fair to assume that a lot of the push deliveries was related to the U.S.? Or is there anything else happening there?

No, there was -- some of it is definitely related to the U.S., but also to Europe. So, it is a combination. But there was delays in both geographies. But from an order intake point of view, I think we have seen good order intake from both North America and from Europe.

And then I had a sort of question on the H-Series, which you talked briefly about. You said before that you expect a significant impact also from that in 2026. Is that something that still holds? And how is the sort of client feedback from that going?

Yes, absolutely. I would say that the interest has been very, very high for the data hubs. It was one of the stars of the show in London, and we are in talks with several customers and several programs about the hubs. So whether the orders will be in early '26 or in the later half, I don't know, but there's definitely real business potential going on.

And the last question was just on order intake size. Of course, a very strong quarter on small and medium-sized orders. And I think you said, if I heard you correctly, that you have been working on the U.S. Coast Guard order for 3 years now. I'm just wondering how many or if you could say anything about sort of the amount of discussions in sort of that magnitude in the U.S. Coast Guard or the Netherlands order framework. How many of those kind of discussions are you in currently?

Well, there are several. I don't want to put a number on it for competitive reasons, but there's definitely an interesting number of similar or maybe not similar to the Coast Guard, but at least similar to the Dutch MoD and others where we are in constant talks and preparation. So yes.

The next question comes from Daniel Thorsson from ABG Sundal Collier.

Two questions from me, please. First one, gross margin, 57%, a bit below ambition, but also expectations. So can you share any picture on the gross margin profile of the order book would be highly appreciated. And then secondly, do you see any hiring risks in the sector given that basically all competitors and players in the market trying to grow significantly right now. Do you see any strong salary inflation to keep employees or hire new ones?

Thanks, Daniel. First, on your last one about the hiring, no. I think given the fact that we -- where we are geographically, are not really under pressure from competitors. So I think we have not seen any issues with hiring, and we have not seen any high pressure on salaries or anything yet. So we're in good shape. And I think we have several means of keeping our employees bonus programs, some option programs, but also competition clauses. So I think they have a good mix of the tools to be able to retain our people, plus the fact that according to our surveys, people actually like to work here and stay here for a long time. So it hasn't been a big issue.

Regarding the gross margin, well, yes, I can't really share the profile of the coming deliveries, but I can say that in this quarter, there was probably a couple of percent impact from currency and from the tariffs. So without that, we would have been close to 60%.

The next question comes from Yiwei Zhou from SEB.

Also 2 from my side. Firstly, Lars, if I recall correctly, you had like almost 9 large contracts won in 2019, and most of them have like 5 years term. Now we are almost finishing 2025. Could you give an update on those contracts? Is there like any retendering coming up or is ongoing or you have extended them?

Without having gone through them one by one, I would say the majority of them has just been prolonged, which they are able to do. So, the has just continued and prolonged the contracts even longer. So, I would say just from our feeling is that they are all still in force.

Are any of them are put up for retendering, if you can confirm?

Not at this point in time. We have had one which was Swedish police, but we got that as well. Again, so I can't recall any one of those that has been put up for retender.

And next question on EBITDA margin. You just raised the long-term target 20% floor. And when I -- looking at the first 9 months and you have to deliver an extremely good quarter in Q4 to meet the 20% EBITDA margin target this year. Should we assume that this year you will not be able to meet that target?

I don't know. That will depend, of course, on what happens in Q4. But I would say, as I say, when we look at the last 4 quarters rolling, then we are at 17.9%. So, we are close. And I think when we decided to increase from 15% to 20%, it is because we have been above 15% rolling for a long time. And therefore, it would make sense to raise the bar to 20%. That doesn't mean that we meet 20% all the time because then the target is too low. So, I think the target is still something we have to work for to meet. But Q4 will tell whether we do it in the calendar year. Again, for the rolling 12, we are at 17.9% or close.

The next question comes from Tom Guinchard from Pareto.

Two questions from my side. First of all, on the sort of split on the gross margin here going into Q4, we have more FX headwinds. Should we expect continued dilution on the gross margin for the coming quarter driven by FX? Or can you compensate with a positive mix here in the delivery schedules?

That would be my -- that would be my expectation that we can compensate with the product mix. Without having all details at hand, I would say, yes, unless the FX headwinds terms really, really there, then I would say, yes, we can compensate.

Perfect. And just a sort of follow-up on that on the tariffs here, SEK 4 million for the quarter. Any changes to that in relation to volumes moving forward? I mean, of course, depending on who you're selling to, but if we look at the U.S. isolated?

No, I think most of the sales we have to the U.S. is actually related to contracts where it is duty-free entry. And that also goes for the new contract with the U.S. Code of Conduct. So, I would still think that the majority of our revenues from the U.S. will be without tariffs. The tariffs are hitting us now when we are selling to public safety, police, law enforcement, fire parking and selling to individuals from our warehouse in Atlanta. And prior to the tariff discussion, we decided to move quite a bit of inventory over to the U.S. to try to compensate some of it. But I would say the majority of our sales in the U.S. will be duty free.

And just a final one on the 2 new frame agreements. Do you have any gut feeling on the timing of deliveries here?

Yes. I think regarding the Dutch MoD, it will probably happen within the -- I think the majority of the deliveries and the orders will come in the first part of the 5-year agreement. That's what we often see at least. When it comes to the Coast Guard, we are a little bit more new to this area. We think they have a huge need. They've been asking for this type of solution for many years. So, they are really happy that they now have it. But we also know that there is a logistical thing into this because you need to get boats into harbor, you need to install certain things and get people trained and so on. So, it's a little longer process of, yes, making training and installations. So, we'll have to see, but I'm sure that the need is very high among the Coast Guard, and we are quite sure that they will be spending a large amount of money relatively early into the 10-year period.

So you would assume '27 should see larger volumes from the Coast Guard order than taking a year to implement.

And '26 as well. I would hope '26 will also show good orders because once the lockdown is over or the shutdown is over, they should be going back to normal '26 buckets. As you know, they started in October, the new budgets in the U.S. So, we should start seeing orders already coming into '26 is my guess.

[Operator Instructions] The next question comes from Hjalmar Ahlberg from Redeye.

A few questions from me. Maybe first on the U.S. Coast Guard framework there. I think you mentioned that you had something like 16 competitors, if I understood correctly. Is that competitors have met before? Or it seems like a lot of competition for that order. Can you talk a bit about that?

Yes. This was information -- this was information that came from U.S. Coast Guard when they also was part of the press release. And we are actually not totally involved or informed about who all these companies were. I would expect that some of them might have been hopeful small start-ups or similar that was trying to see a foot in the door because I'm not really sure I can count to 16 competitors who no matter what I do. So, I'm not really entirely sure who they are.

And I think -- I mean, you kind of asked this kind of question before, but looking at framework agreements going forward, this was your new record size here. Do you see more of this kind of large long-term framework agreement comments? Is there any trend in longer-term, larger contracts in your sales pipeline, I would say?

They are definitely present, but I wouldn't call it a change. I think in general, the order sizes, when we talk about small and medium, these are the ones we would call large orders 5 years ago. And we saw the fact that we are now selling a much larger broader system. The average price for Intercom system with accessories is so much higher than what we used to sell for other system. So I think in general, there will be larger order sizes even for what we call medium size. So -- but Coast Guard framework agreements, there are more, but there are not that many of that size.

And as you highlighted, you have several new products with -- that seems to get a lot of interest. I mean if you look at the market -- the potential for growth from here, I mean, you do see high market activity. You have this new product portfolio with more products. What do you think is most important for achieving your growth target over the next 5 years? Is the new products more important than market growth? Or if you can elaborate on that a bit?

I think, as always, we have been driving market growth ourselves with our ever-increasing product portfolio. And I think the product portfolio we have now will, to a large degree, drive our growth, but it will also open up the market even further. Because, as I said, with -- for instance, with the solution for the Coast Guard, this is something that no one has had before. And there will be many customers around the globe that will be looking at this and say, hey, this is a totally new -- in the past, we used to have cables lying around the coast on the boat. Now we can have a wireless solution and move around free, and we can hear everything and talk with this very wit and noisy. And so, it's a totally new capability we haven't had before. So, I think to a large degree, we are driving the growth with our continuous development of our new products.

And maybe a final question. I mean, you do see high market activity. Could you also give up the kind of defense budgets? I think you said earlier that you hope to see some clear indication that these are affecting the demand. Do you see anything there yet?

Yes. I would say the frame order agreement we got in the Netherlands is definitely a response to that. So, this is part of a ramp-up in the Netherlands that now everyone needs to have a very, very good communications and living protection solutions, both on the ground and in vehicles. So absolutely, that's the first result of that.

There are no more questions at this time. So, I hand the conference back to the CEO, Lars Højgård Hansen, for any closing comments.

Yes. Thank you all for listening in. I apologize if the sound quality, the microphone has been poor. We will definitely make sure that this is corrected before next time when we speak in -- when we have our annual Q4 report. Thank you.

Welcome to INVISIO Q2 Report 2025. Today, I am pleased to present CEO, Lars Højgård Hansen; and CFO, Thomas Larsson. [Operator Instructions]. Now I will hand the conference over to CEO, Lars Højgård Hansen. Please go ahead.

Thank you, and good morning, everybody. Welcome to our conference call. For the Q2 report, we have chosen the headline high levels of market activity continues. That is definitely what we see and which is also, to some extent, reflected in our reporting. Our financial highlights for the quarter is revenues around SEK 430 million, order intake around SEK 400 million; operating margin, 14% and the order book at the end of the quarter, SEK 705 million.

A couple of things have impacted us during this quarter. We had a little delivery of remaining third-party radio sales from last year with a lower gross margin. we have also been impacted by the strong Swedish krona towards both dollar and British pound. We have also had a little impact by the U.S. tariffs. We'll get back to all of those in due order.

The operational highlights during the quarter is, first of all, a significant order from a new large customer entailing our world-leading new X7 in-ear communication solutions. We have also this morning updated our financial target regarding the EBIT margin. As we have said several times, we see strong opportunities for INVISIO due to the increases in defense investments that are ongoing and will be accelerating in Europe and within NATO over the coming years.

If we start with the revenues, our revenues close to SEK 430 million in the quarter, and of that, there was a small portion, close to SEK 30 million remaining of the radio order we got last year. If we exclude that, the revenues was around SEK 400 million, a little higher than last year, but then we have the currency effect, mainly due to dollar and pound, as I said, and in comparable currencies, our revenue would be SEK 450 million, as compared to SEK 390 million last year, including the radio order. We are quite content with that.

On the order intake side, we saw an uplift from SEK 245 million last year to SEK 401 million in Q2 this year, and that takes the rolling 12 order intake to about SEK 1.7 billion. This is led still by a good continued inflow of small and mid-sized orders and then one large order on top. Yes, I think this again, illustrates the seasonality we have between quarters in our industry, but all-in-all, we are quite satisfied with the SEK 400 million in the second quarter.

The order book, turning to that. Most of the order book, as usual, will be delivered within 6 months, and this means that the current order book of about SEK 705 million is due to be delivered in the second half of 2025. We have a little bit remaining of the third-party radio order. That's about SEK 38 million still remaining where deliveries still are not confirmed. By that, we have about SEK 670 million to be delivered in the second half of the existing order book.

Gross margin is also impacted by a few things. again, the third-party radio deliveries were with low gross margin just over 10%. So that impacted our gross margin somewhat. If we exclude that, the gross margin was close to 60% as compared to 63%. Then we have the currency effect, and then we also have about SEK 4 million in tariffs that is pulling the gross margin downwards in this quarter. Yes, and then there's the usual product mix sometimes. But in general, we are very pleased with this. We can see a good stable gross margin on our key products and also expect that to continue. We have a product portfolio that is almost now exclusively consisting of newly developed products, and that will continue to support a strong gross margin going forward, but as usual, fluctuations will occur between quarters.

On the operating expenses, we are following our trend. Here again, there is a few smaller fluctuations between quarters related to hirings mainly we have grown our headcount about 15% in the last 4 quarters. Some of that related to the acquisition of UltraLYNX in the first quarter, but others also related to our expansions according to plan in primarily R&D and in sales. We have a very impressive list of new products that have been introduced to the market within the last 12 months, like our V60 Generation II audio data and power control unit, our new world-leading X7 in-ear headset, INVISIO Link Control Intercom system app, our Intercom Switch, Intercom loud speaker, acquisition of UltraLYNX and so forth. And then many, many smaller product variations and customer-specific cables, et cetera, that are not included on this list. The development is -- level is really, really high, and we, of course, expect to get good payback from this over the coming years.

Operating margins, a bit lower than last year, mainly explained by the lower gross margin and a little higher operating expenses. If we look at the rolling 12, we are at 19.9% at the end of the quarter, just shy of our new target of 20% EBIT margin over time.

So just turning to that. We have had our existing financial targets for 10 years, and we have been reviewing them continuously, of course, with our Board of Directors and now the financial target for the operating margin has been updated so that it is to achieve an average annual operating margin of at least 20% over time. The other financial targets remain unchanged. This change on the EBIT margin reflects how we have been performing over the last years, but also our expectations to an increasingly active market environment where we think the future sales will grow at a faster rate than the total cost base, so this is an evolution for the company. As always, our industry, our company performance should be evaluated over an extended time frame as we see significant volatility between quarters. I guess you are all very familiar with that by now.

Inventories, inventory value, a little higher than last year and now around SEK 300 million. This is a result of, first of all, expected deliveries with short time frames in the second half of the year. We also did move a little bit of inventory to our facility in the U.S. prior to tariffs being put in place, but this is mainly for deliveries in, yes, the second half of the year. And inventory, again, is also almost predominantly standard products, plus some key components, and we think this gives us a significant competitive advantage in the market environment that we have where speedy deliveries is very appreciated.

Cash flow, not too much to say around that. There's a couple of things impacting us more from an IFRS perspective. We have a new office in -- new office lease in, which I'll come back to. You can find the details in the cash flow statement. Operation-wise, during the quarter, we had a significant order from a new European customer that includes control units, cables and our new INVISIO X7 in-ear headset solution, which is a new standard for comfort, weight and situational awareness and of course, hearing protection level where no other headset in the market can match the hearing protection levels that we provide with the X7. This new European customer is of significant size, and we would expect further orders also to come from this customer over time.

The deliveries of this first order will happen during 2025, and it's, of course, very important for us now to have statements with our new in-ear solution. As always, new products takes a bit of time to get established in the market, but we've seen really good traction with the X7 headset so far, and we expect this to be one of our front runners in the years to come. We are -- have also expanded the capability of our Intercom system with the new wireless Link, INVISIO Link that we talked about also in the Q1 update. Our next upcoming trade show of a major size is in London in September, the DSEI, where the INVISIO Intercom with a Link and the rest of our product portfolio will be displayed in an updated marketing setup and an updated booth, and we will are very excited to be present there and talk to many of our European customers.

We have also added an Intercom switch and a loud speaker to the Intercom family of products to give even more capability and functionality within vehicles. As you are all aware, there are very strong increases in defense investments in Europe happening over the coming years. NATO have now agreed to the 5% GDP target, of which 3.5% will be invested into equipment and capabilities. As I said several times before, we, of course, expect this to be a driver and a business opportunity for INVISIO for many years to come, along with the European Defense Readiness 2030 initiative, which will also mean high focus on defense investments in the European Union. All of these are underlying strong drivers for our market, and as we haven't yet seen the impact of this, we, as said, also many times before, we expect this to happen from the later part of '25 and onwards.

Now the tariff discussion and negotiations are ongoing. We do not have any more information than anyone else about where that will land. We have had a negative impact of about SEK 4 million in the first 6 months of the year. Historically, defense equipment has either been tariffs exempt or having very low taxes. We don't know where this will end yet as negotiations are ongoing with -- between the EU and the U.S., we are preparing ourselves for different scenarios. We have done that for quite a while, and that includes also manufacturing in the U.S. as well as other initiatives depending on where these negotiations will land.

We acquired Racal Acoustics 4 years ago, and we have now fully integrated the operations of Racal into INVISIO, so we are one company with 2 brands. We are a modern high-tech company in the defense industry, and in line with that, we are now upgrading our facilities and also preparing for growth in the U.K. We will be relocating our U.K. office to a new, more modern facility in Croxley, just outside London, and this will happen in the second half of September.

In summary, we are pleased with Q2. It is in line with our own plans and expectations. We think, we have reported good revenues and order intake. We saw a new large order from a new customer with future potential, but it is the long-term perspective that we always take. We continue to invest into the product portfolio and into the organization, as we have done in recent years, and by that, preparing ourselves for the strong market activity leading into large upcoming defense spendings and giving us a solid platform for continued growth. We look forward to the second half of 2025, where we will continue to strengthen INVISIO and hopefully see a very strong set of results when we talk later in the year.

That will end my presentation, and we are now open for questions, please.

The next question comes from Jakob Marken from Danske Bank.

Just a couple of questions from my side. Firstly, maybe on order intake. You ended last year with underlying order intake that was very strong in both Q3 and Q4. Then you could say that it's been a little weaker here in Q1 and Q2 this year. I'm just wondering if you can give us any more color on that, if there's anything particular you've seen or if it was anything particularly strong in H2 or how we should think about that going forward?

I think the activity level is really, really high. There are good reasons to believe that the second half will be strong. Will that happen? Well, as always, we are depending on decisions in government organizations and so forth. Sometimes it drags out a little bit in time, but I definitely think that the underlying interest and demand for our solutions is strong. I think there are good reasons to think that we will have a good year as we also had last year.

Because that was my follow-up on that one. You sound very confident on H2. I mean, you had a super strong H2 last year. I mean, is it reasonable to believe that you can match the numbers from last year? Or how do you view that?

I think as I -- my standard answer to that is always that most of the time, is it possible? Absolutely. Will it happen? Well, that will depend on timings, but the underlying interest and the pipeline is definitely there to make it possible. We could run into delays of certain projects where it just takes it past Q4. In some instances, it's also related to other equipment that the customer is buying. Sometimes they are buying a radio separately, but they want to have our deliveries same time as the radio, and then if the radio has a later delivery time, then we will be pushed out as well. It's a little bit out of our control, but it's definitely not impossible.

Then just a follow-up on the -- you talked a little bit about the Intercom Link, and I'm just wondering if you -- how has the interest been this far? Also, if you can give a short comment on the UltraLYNX acquisition, how the integration is going? Do you think that can contribute already in '25? Or how do you view that?

Yes. The Intercom and the Link, the interest is really, really high, and we have -- we're just now ready to ship the first ready units to customers for testing and verification and hopefully soon getting into order phase. I do expect that to be a very significant contributor to the Intercom business over time. You can say that the Intercom product portfolio that we have has developed from when we started, it was a rather simple system with one box. Now it is a much more complete system, where you have an app for controlling the Intercom. You have loud speakers, you have switches, you have volume controls. It's a much more flexible system for the user and now also with the wireless part, which really has created an enormous amount of interest.

As I said, the Intercom and the Link will be a key feature at our upcoming trade show in London in September, and I'm sure there will be a huge interest. Also, the UltraLYNX is progressing. We will be renaming it to INVISIO Products, and that will also be one of the key product lines at our trade show in September. We have now done most of the internal preparations, setting it up in INVISIO manufacturing and preparing the training our salespeople and all the necessary things that needs to be in place. We are ready, and we have also the first quotes out even for a little bit more significant than just a few units. We do expect to see the first good orders before the end of '25.

Then just the last question on the tariffs that you mentioned. Is there -- is it -- could you say if it's related to military side or police or both, just to know.

It's predominantly related to the police side at this point in time. So -- and things where we have shipped from Copenhagen to our facility in Atlanta and then shipped to police customers. It's predominantly police customers, law enforcement customers.

The next question comes from Hjalmar Ahlberg from Redeye.

Maybe first question on this new customer order. I think you said that you see potential for more orders there, but can you say anything on the potential size of the customer? Is this like an order for part of the potential unit or so to say? Or is it the full potential in this order?

No, it's not the full potential. I don't think I can quantify the size, but as usual, when we have a new customer of this size, there is a huge potential for upselling and adding the rest of our system, Racal products, Intercom, but also more headsets and control units over time. I'm not able to quantify it, but I think there are -- and normally, when we have a new customer like this, it's a long-term relationship where we can see that the follow-up orders from the same customer, just replacements and so forth is at least 20% per year of the original order. I think it could be more -- there is a high interest from many customers now to expand into buying more complete systems, meaning they start with soldier systems and then they add the vehicle part and the Intercom part and so on.

In this very, very busy time, many customers would like to make it simple and buy a larger system from one supplier where we then take responsibility so that everything works.

Then a general question, follow-up on that is, I mean, if you look at your sales pipeline or the market activity, is this related to old customers buying more? Or is it also new customers? If you can give any sense of the mix there?

It's definitely a good mix. I wouldn't be able to put a number on it, but it's definitely a broader mix. It's also, again, a much broader mix where sometimes a customer will -- a new customer could come into our pipeline because of the UltraLYNX hub. Then when they see what else we have in the portfolio, then suddenly it becomes much broader than the first customer contact. I think the fact that we have a very broad portfolio is making us relevant for many more different types of customers than previously. This will only continue to grow with our growing portfolio.

You said that you're kind of preparing for a potential more impact on tariffs. Do you think that you -- that we should expect that the gross margin could be a bit more soft in the short term because of this effect? Or do you think you still have the 60%, 65% gross margin? Is that still relevant in the short term?

Yes. I think short term, nobody knows what is going to be the new numbers. We are just staying close to the different agencies here and in the U.S. that are trying to find out what the new normal will be, but until we know that, there might be a short-term impact. As I said, we have plans for in different directions. We don't want to put them into place until we know for sure what the new normal will be.

Also, a question related to gross margin. I mean you said third-party reg can still delivered, but you don't know when, but could it still come more in 2025? Or is it more in 2026?

Yes. I think it is originally scheduled for 2026, but we -- it could, of course, be pulled in if for some reason, the customer changes his mind. It is in the plan, it's scheduled for '26.

The final question, just on the U.K. office. I mean, does that have any noticeable impact on OpEx in Q3 or Q4?

No, only in the terms of IFRS to call it paper money, but it's lease agreements.

The next question comes from Daniel Thorsson from ABG Sundal Collier.

My first one is just can you recall us how much third-party deliveries you expect to have in Q3 here from the radio order last year? I apologize if it was already taken, I missed part of the presentation here.

No problem. We don't expect anything in Q3. The remaining part of the radio order is -- by plan, it is scheduled for 2026. Unless the customer changes his mind, it will be in '26.

Then the second one on the underlying gross margin just below 60% here. Is this a mix driven? Any limitations getting prices through to customers? Or are you seeing an increased competition for your products from the larger general suppliers to the industry?

No, it is 3 things. It is currency and it's a little bit of product mix, and then it's the tariffs that has brought down gross margin a little bit as well.

Then the second one, first half year costs figures are up around 25% versus last year. Is that roughly the pace we should expect for the second half of the year as well to be up around 25% versus second half of '24?

It was a little higher in Q1 this year because of the acquisition of UltraLYNX, where we brought on 8, 9 new employees, and now we have the full effect of that. We don't expect to have that increase in the second half of the year according to plan. It's probably a little higher now in the first half.

The next question comes from Mads Quistgaard from DNB Carnegie.

I will take them one-by-one. First, coming back to your comments on the second half of this year being busy. My question is, will this mainly be in Europe, given what we're seeing in the U.S. with budget costs. One could assume that the tender processes have been delayed over there? That would be my first question.

No. We have a very high activity level in the U.S. and it is also my understanding that the new so-called Big Bill that was now approved in the U.S. actually contains quite significant increases in investments in military and law enforcement. Our U.S. team is very positive also for the second half of the year and onwards. We have the same high activity level in the U.S., s it is broader.

What we also see in the U.S. is obviously major investments into military projects, which includes AI and so on. I also saw, I think it was 2 months ago that Meta took over the program Eagle Eye from Microsoft. Just to understand, do you see that as a threat to your underlying industry? Or how do you view such programs in the U.S.?

No, not really. I would more see it as a complement. There has been different technological attempts related to heads-up displays and [visas] and other things. They still need to interface to the type of products that we have, and we have a good relationship with some of those programs and activities that are ongoing. I think they've so far had a little hard time making it into real products more than for training purposes, but let's see. I think it's more an addition and a complement to what we do.

Then my final question is more of a bookkeeping question and it's on net financials. I can see that you write in the report that it's due to strengthened SEK against GBP and USD. Is there anything else in the net financials given that it's minus SEK 30 million? Also, what should we expect for the second half? Because given my FX forecast model, I see the same strengthening of the SEK against USD and GBP.

Yes. The SEK 13 million that you are referring to, they are intercompany transactions. Again, back to IFRS rules and how you report that. If I should try to give one example, for instance, when we transfer products, we transferred products to Atlanta prior to the tariffs to try to avoid some of the tariffs. Then also, when the dollar has a lower value before we sell the products, then we have to take that difference as a negative, so the SEK 13 million are purely intercompany transactions.

The next question comes from Adrian Elmlund from Nordea.

Adrian Elmlund here from Nordea. A couple of questions from me. Also, I missed parts of the call. Sorry, there's a lot of calls going on. Maybe you can just -- I can have a follow-up here on the gross margin. Should we expect further pressure on the gross margin in H2? Because [FX] and the tariffs.

Again, it is really hard for me to say that at least for the tariff part, it's really hard to know what the outcome. I think there is a plan for the EU to have something in place with the U.S. before end of August. Before we know what that means, then it's really hard for me to estimate, but I would say from a business point of view, we don't see any impact on the gross margin. Of course, we won't know what the future of the currencies hold, whether that is a further decline or strengthening of the dollar. I think from a business point of view and from a sales price point of view, I don't see any pressure on gross margin.

Could you, in any way, quantify how much of the decline in the gross margin is due to product mix, contra FX and tariffs?

Of course, there was quite an impact due to the radio sales with 10% gross margin. That gave a couple of percent, if I remember the number correct. The product mix, again, we have a product mix depending on shipments to law enforcement with a lower gross margin or if we sell through a reseller or a system integrator or if we sell direct, and it is just the mix between those deliveries in a quarter that makes up. In general, our gross margins and especially with the newer developed products that we have launched have very strong gross margins.

Secondly, what are the main reasons behind the increase in OpEx? Is this R&D or other types of investments?

It's R&D and sales, and then the acquisition of UltraLYNX.

For the second half of the year, what should we expect here in terms of OpEx increase sequentially?

We continue to add people, both in R&D and sales where we see the necessity. Right now, there's maybe more focus on the sales side because the activity level is really, really high. It's always a matter of -- we constantly have a dialogue with relevant persons that could join our team. Then when the opportunity is there, we will hire them when it makes sense. There is going to be a little bit of fluctuation, but it still follows our plan. I think the first half was a little heavier due to the fact that we acquired UltraLYNX, and we brought 8 people on board in one role.

The next question comes from Yiwei Zhou from SEB.

I have 2 left here. Firstly, Lars, recently, I heard the military vehicle manufacturer talk about massive order from European countries. Based on your dialogue with the customers and your partners, when do you expect to see this will start to benefit you? Is it part of your second half strong expectation? Or is it more like '26, '27?

That's definitely further down the line. Many of these -- I mean, it's, of course, a massive opportunity over time with all these vehicles being built. Many of them will not decide for the communications equipment until they get much closer to delivery. I think many of these vehicles -- yes, I don't have the details, but I think the delivery times are probably from 24 months and upwards. That's going to be a very strong driver for us over years to come, but it's not for '25.

Then I'm also curious on the updated EBIT margin target. It's more on the timing. I remember 6 months ago, you just updated the market size estimates. What's triggered that you're also doing the update on the EBIT margin? I know it is widely expected that the EBIT margin should be above 20%, but still the timing is a bit.

There's nothing specific about the timing. It is more -- we have an annual process with the Board of Directors where we look through the targets. Of course, we updated the addressable markets, and we also now -- I mean, it was -- we had a couple of years during the pandemic where it was very unstable and volatile. Now we are back to a more stable track. We can see historically for the past couple of years that we are higher than our recent target of 15%. I think we are a company with a strong winning culture. We have to have targets that we have to work very hard to achieve, and at least this is an update of where we are right now. I think it's also natural based on the fact that when we can continue to grow our revenues with 20%, we will see a positive impact on EBIT margin over time as well. I think it's a natural.

I guess the 20% that doesn't put a limit on the quarterly EBIT margin.

No.

It's only on the full year.

Yes.

There are no more questions at this time. I hand the conference back to CEO, Lars Højgård Hansen, for any closing comments.

Thank you all for calling in today. I know you have very busy times with many, many companies reporting. Our next call will be with the third quarter update on October [3]. I will talk to you all again shortly. October 23, that is. Thank you, and have a great summer all.