Vaisala Oyj

Hello and welcome to Vaisala's second quarter and January-June 2026 results call. I'm Niina Ala-Luopa from Investor Relations and today with me in this call are President and CEO Kai Oistamo and CFO Heli Lindfors. Like always, first Kai and Heli present the results and then we proceed to Q&A. Kai, you may start now.

So, sorry about this. So I heard... There have been some audio problems, so maybe I'll restart so that everybody can hear what I say and hopefully the technical challenges are overcome. So, as I was saying, very strong orders received in the quarter. We continued to perform across the company very well, and really the order intake was really driven by extraordinary demand in terms of industrial measurements, and that drove The company's order intake to increase 11% compared to the year before. XWeather continued on a good track, on double-digit growth, 15% year-on-year growth in constant currency. A key event in the quarter for Exweather and for the company itself was the acquisition of the AI weather company, Atmo Inc., as we announced in the second quarter. I'll talk about that in a little while. In terms of weather, energy and environment, The quarter was more muted as we expected going into the quarter. But even in this environment, I think the team performed really well and delivered strong profitability results. Are we still having the problems now? Okay, we are reconfirming the business outlook as I'll conclude in the end. But before going into the numbers themselves, I'll talk about the two key events during the quarter. I'll start with the product launch, which I rarely do, but I think this Presicab products that we launched in the second quarter I think merits very much of taking it as a key highlight in the quarter. So the state-of-the-art way of measuring rain is what we would know ourselves if you have your own rain bucket somewhere in your summer place, at your house, at your place. So it's a bucket which then catches all the drops and then you just read how much water is in the cup. But if you own one, you also know that in the fall it's full of leaves. It will have insects. The accuracies are whatever they are. It requires maintenance. And it's kind of remote operation really is not possible at all without maintenance on site. And this has been the state-of-the-art way of operating rain measurement since almost the past 100 years. We took on a challenge that with the modern technologies, this probably is not the best way of doing things, given all the challenges related to the rain buckets. So what we did is take a miniaturized version of a radar, turn it pointing upwards, so that we can actually measure with it, with Presicap sensor now, every single droplet that it sees. So not only can we measure all the rain, but we can actually see the size of the droplets, We can distinguish the different sizes of what kind of a rain or hail it may be. And we can actually see even the direction that the rain comes, i.e. we can see the wind impact on the rain as well. And, oh by the way, it is also more accurate. It requires no maintenance to speak of, so it's very easy to to save on the maintenance cost and use especially on the remote sides. It's a great example of taking something which everybody works on and nobody thinks about it, even the challenges that it has, that can be reimagined with right kind of insight, right kind of a team, right kind of capabilities, and it really is what defines really an innovation, and I think it's really good us to to the capabilities that the company and the team involved really has had. It also highlights how well we understand the phenomena in order to do these kind of reinventions, such as in this case RAIN. This very much actually combines to the AI topic that I'll talk next. In terms of an AI world, There are two things that are super important. It is about all about the data. What kind of a data, who owns the data, who understands the data that feeds AI. I think that Presicap is a fantastic example of how we as a company, we actually understand and can measure data, can measure weather-related data better than anybody else. That in combination with what we have been building in XWeather in terms of capabilities on forecasting and capabilities in machine learning and AI, building the entire asset on machine learning and AI. And now, together with Atmo, which we find really the world's leading by far in terms of a company and asset and a team in terms of weather-related AI capabilities. Weather forecasting is going to change based on AI. That's already happening. So lots of attempts by different companies, different teams around the world. What sets Atmo apart is that that they really have a unique scalable model where you can take, based on local data, that can be the weather data that I was talking about, it can be customer data as well, and you can create a local AI-based weather forecasting model, very scalable, in a very scalable way. You can do very local, just imagine we could do on our site here at our headquarters. Or it could be regional, it could be global. Anything where Atmos model is not based on a single AI model, but it actually takes as an input, it can utilize anything that anybody else may innovate, and it can ingest those into its own world's leading model. It's also run by a team, which we find really a best AI-capable team that we've seen within our industry and proven by a very, very interesting customer set who are paying for the service already today. A couple of examples of this would be from the civilian side, MET agencies, Bilippi's meteorological agency has been relying on an atmosphere model for more than a year, weather forecasting. and other great examples is on the defense side. There's multiple branches of U.S. military, but most notably U.S. Air Force, who is also relying some of their operations in Atmos AI-based model. So what we together now with what we know in a traditional side of the weather, what we've been building on in XWeather, and now in combination with Atmo, I think we have world's leading assets, teams, capabilities in all parts, what whether business will look like in the future from providing and understanding the data to building that into a modern platform, customer focused offering based on AI. So very, very exciting, exciting news. Now, with that, I'll hand over to Heli to talk about the financials in more in-depth.

Thank you, Kai. Good afternoon from my part as well. As I already mentioned the financials, but if we dig in a little bit deeper, So the growth in orders received, 11%, really driven by the industrial measurements with 28% with constant currencies, while the weather side had a little bit muted and saw a slight decline on the orders received side. This orders increased growth also boosted the order book, close to 200 million, 7% above the level at the end of 2025. and also the ARR similarly rose by 7%. If you then look at the net sales, it increased by 4% or 6% in constant currency. Also here the kind of main driver is coming from the industrial measurements with 10% growth and ex-weather with 13% growth. Also here the net sales had on the weather side a slight decrease. The kind of net sales growth as well as the favorable sales mix improved the gross margin and it also had a positive impact from the kind of lower tariff level of 10% we have seen since February. Going further, we do expect that this has been a temporary level of 10% and once the US and EU trade agreement comes to force, it may be again 15%, but we will of course see then and what it will be later on now in Q3. The cross-margin improvement and the increase in sales also improves the E-data to 14.6 percentage points. Of course, here we do see that we also increase our spend in our OPEX by 8 percentage points, and that is investments in the sales and marketing activities as well as the R&D in our growth areas of industrial measurements and X-weather. Also the return on capital employed improved from last year to 18.2 percentage points driven by the higher EBITDA as well as the strong cash flow and releasing our capital employed. If we then move on to the industrial measurements and record high quarter in all means. The orders you see are set increased by 28% in constant currencies coming from a very wide base. So all market segments and regions were growing, but particularly the Americas, and it was further boosted by the large orders from data center and power customers. This one also boosted the order book to 33% above the level of the end of last year. This is due to the increase in the larger data center and power related orders. So if you consider a year back and before, most of our orders were delivered within weeks, whereas now these larger orders on top of these kind of deliveries within weeks, we have now orders that also span across a few months going further. And this is visible in the We are delivering 44 million out of this order book still within this year, so it is still a fairly short order book overall. Net sales increased by 10%, and here you see that the increase was less than in the orders received due to this change in the mix of orders. This was still 13% in constant currencies, and here the driver was the ABAC region. The cross-margin improved then following the net sales increase and also the positive impact on the tariff side. This also boosted our EBITDA to 24.5%. We also gave you some further granularity on our largest market segments in the industrial measurements side. and this is now, you can see the new split here. So the life science continues to be the 30%, as we have said before, and now the new information is the quantification of data centers and power segments, both being at around 10% of sales. We do have the other key kind of focus industries, as we have been saying, semiconductors and battery manufacturing, and then of course a wide range of other industries as well. If we then look at the Xweather side, the annual recurring revenue increased from the 7% from a year ago. Here we can remember the seasonality we have in our ARR as well as this is then including the FX and now of course, In the beginning of the year we still had a larger FX impact compared to last year whereas now at the end of Q2 we have now seen a full year of the depreciation dollar and related currencies so now the impact starts to be smaller and this you can also see that the net sales increased by 13% and 15% in constant currencies so now the reported currency as well as the and Constant Currency, they are much closer to each other again. Here you can also see that the net sales growth came from many areas, not only one, so insurance industry as well as transportation and logistics, and then also the developers and API customers that buy more of the DAS side of business. The increase in net sales also boosted our cross-margin, the same as in other businesses, and this also boosted our EBITDA percentage. And of course, if you see the kind of EBITDA improvement, it is material, but as the ex-weather figures are still fairly small, this is of course only €800,000 difference to last year. Then moving on to the weather, energy and environment side, it was a slower quarter as expected, and the orders decreased by 5% in the mainly coming from the project orders. The order book as such remains on the same level as it was at the year end. The Indonesian weather project order that we have announced already a while back, it did move ahead and the customers financing arrangements were clarified. We are still missing the last steps of this order before we book it to our order book and that we do expect to happen now within the third quarter. Net sales as such, they were close to previous year's level. We did see an increase in the project and product deliveries on the weather side, whereas the decline in the renewable energy sales continued on that side. The favorable sales mix then also improved the cross-margin and also the EBITDA side. Here you can see that also the operating expenses were maintained following the development on the sales side as well. Then moving on to the cash flow side, the cash flow from operating activities increased to 48.9% per million, not percentages. and it is really boosted by the kind of increased net result as well as timing of tax payments compared to last year as well as lower level of projects receivables. The cash conversion was strong, 1.3 in January-June. Then if we look at the half-year results as such, Net sales increased by 7% in constant currencies as is our strategic target. The operating expenses increased by 4 percentage points and this is investments in the industrial measurements and etc. side, so in the areas where we grow. The corporate and non-operative items, they were 4.5 million up from 2.7 last year. These are one of items among other M&A expenses. As such, the solid profitability continued and improved to 14.8. And then one item to highlight is also the financial income and expenses that is fairly different from last year. So there you can see that the kind of volatility of the currencies have been less. And as we are also less leveraged, the core financial expenses were more than half less than last year. This, of course, then boosted also our earnings per share in total. The strong profitability as well as cash flow does bring us to strong financial position that continued has been strong for us also for a long time. So we continue to be low leverage in our balance sheet. One thing to highlight here is the capex that is on lower level than last year. Last year we were building our Automated Logistics Center, and we don't have that this year, so that is why we are on a lower level of CapEx year-to-date. Then we move on to the market and business outlook.

Yes, so when we look at the market outlook for the rest of the year, no changes in this. We expect all markets underlying industrial measurements as well as X-weather to continue to grow, so industrial Life Sciences Power, and then the markets for ex-weather and subscription sales. And then the markets for the weather, energy, and environment is focusing on meteorology, aviation, and renewable energy continuing to be stable for the rest of the year. And this leads into reconfirming the business outlook. In terms of net sales, we continue to estimate that our net sales will be in the range between 600 to 630 million euros and our EBITDA result will be in the range between 95 and 110 million euros. And this brings to the end of the prepared remarks and we would be happy to

If you wish to ask a question, please dial pound key 5 on your telephone keypad. To enter the queue, if you wish to withdraw your question, please dial pound key 6 on your telephone keypad. The next question comes from Nico Ruokingas from Seb. Please go ahead.

Hello, this is Nick Ronis from SVB, thank you for the presentation. I have a couple of questions and I'll go one by one. First one, you highlighted large orders in data center and power segments in industrial measurements. and I guess individual orders have typically been relatively small in the area earlier. So how big were the individual large orders now in Q2 and how much of the order growth in industrial metamers was extraordinary as you phrased in your presentation?

The larger orders are a few millions of euros, the largest ones. But as Kai actually mentioned, the order intake came from a very wide, kind of wide range of different industries. So as such, we say that it's extraordinary good, but it was not solely driven by these larger orders.

Or extraordinary orders per se.

Exactly.

Okay, good, thanks. That clarifies. Then on X-rayer sites, The ARR did not grow Q&Q despite the year-on-year growth. You highlight the seasonality there, but how much was this seasonality impact, and can you give a bit more color in this?

Okay, so the seasonality in the ARR comes from the winter maintenance contract as well as lightning. So these are something that the best comparison point is the year before that you can compare to. and the best kind of the cross-year seasonality would be last year's ARR development.

Yeah, and we're going to just like maybe just a little bit of explanation why that the winter maintenance is on the winter months and the lightning is seasonal as well that in especially in the northern hemisphere the lightning activity is related to certain parts of the year more than other parts of the year.

Okay, thanks. But I guess if we compare it to last year, we have the FX impact last year, as it was quite big a year ago. What's your guess?

Actually, no, because the ARR is actually kind of, that is translated with the end of the month currency rate, not the average one. So it is the end of the month. So last year the rate was 1.17 at the end of June, and now it was 1.14. So, if you compare last year's evenality, they were correct, so Q1 was still with the higher rates, and then Q2 was actually with the headwinds of the US dollar.

Yeah, that's what I meant. If I can ask one more question, and then I will let others ask. So, relating to the PASMO acquisition you already did ask a bit on, Can you give a bit more power from financial point of view both on sales and profitability outlook and then also reasoning behind the price paid for the business?

Yeah, so at this data we cannot give anything more than what we said that last year's number was 2 million USD and then this year's contracted Thank you very much. A few things on this. Obviously, it is based on the business case that we have, and we can't consider that it represents right value, but the opportunity it brings, especially long-term, I mean, thinking about this is more of a long-term than thinking about a short term on this. So that's first consideration on any NNA, that it needs to bring The second thing is that obviously part of this is the capabilities as I was highlighting in my prepared notes that the capability we believe that this is the world's best AI team that there is in the weather domain. The second thing is that what I said in the In my prepared remarks was that they also have a very interesting customer base that has verified their service, so it's really like a verified, and there's customer traction, people are willing to pay for it, and the customers are very interesting customers as well, offering us both synergies as well as new growth in terms of where we have had access to before and mostly I highlight the domestic agencies, but also the defense side and especially the U.S. Air Force is a very interesting reference.

All right. Great. Thanks. That's all from me.

Thank you. Then I see Matti has up next.

Yes. A couple of technical questions first. Actually three of technical ones. Now you have given some new information on the industrial measurement, say split, so that medically 30%, 8% there's 10, power 10%. Earlier you have said that these four growth areas would be 30% and of that 8% and power were mentioned, but also semiconductor and batteries. Does it still apply that the 30% goes to all these four, so that semiconductor plus batteries would be 10% combined?

Yeah, the math is exactly right.

Yes.

Is it good? Yes. Then to Heli. Now the group costs were quite elevated in the second quarter. I suppose they related to the M&A. But should we expect that now the high level in Q2 would come back to earlier levels which are closer to 1.5 million or less? Is that the way to assume future quarters?

One, of course, vary between quarters depending on how high activity we have on the, for example, on the M&A front or whether we have some restructuring or something like that. Also if you compare to last year, it depends really on the quarter on the kind of the level of this one, of course.

But other than those, there is no changes in the activities, should I say. Right. Okay.

And then to the industrial measurements or the backlog question that you already answered to some extent. Now, The reason why you didn't deliver all orders, there was a big spike of course, but was it because you didn't have capacity, or your sub-suppliers couldn't do it, or was it so that the contracts just were for a longer period of time?

No, we did not meet any deliveries or sales or anything because of lack of capability to deliver. So that's not the reason at all. It's more reflecting on what Heli was saying, that Part of the order book now has a little bit longer profile than what the traditional three weeks has been. Okay.

And then when you talk about the service contracts being roughly 10 million and 17% of the order book, how long are they actually? Are they longer than for one year, for instance?

Yes, they can be longer, so can be 35 years.

It depends on if they vary from typically a year to a few years.

Okay, so it's a bit difficult to estimate how much of that part of the order book would land in a specific period, so we have to just take some wild guesses that it varies.

Yes, but actually if you think about it, so why we now highlighted it is because it has somewhat increased. We also give you the figure of how much of it is coming after the 2026, and of course the longer we go, the less there is to deliver.

So you see that maybe what we are expecting out of the order book, what we are expecting to deliver this year. So that fact you have. And if you think about what is not delivered in this year, that notoriety of that is service contracts.

Right. All right. Thanks. Then two questions which are more broad. So Regarding your guidance, now your first half has been fairly strong. You haven't changed your guidance. Is there any specific risks that you see, other than geopolitical, that makes you not change your guidance at this point?

It really is geopolitics and then consequential, like what that means to overall economics and financial and economic activity. That's it.

All right. Then finally the Admiral acquisition that already discussed. I mean the price is astronomically high and it would be nice to hear your thoughts. Why do you think that you must pay up to 130 billion US dollars to get this company? So is it something that You are afraid it would slip to a competitor or it would become a big competitor to you if you don't buy it out from the market and use it yourself. And how do you otherwise justify the payback period for the company? Judged by the company's current financials, it could be like 50 years, which is fairly long. But any thoughts on that, that why is the price astronomical? So, a couple things.

I made most of what I wanted to say already when answering to Nikola. But first of all, if you are asking if we acted from a fear perspective that there would be a competitor that we wanted to take out of the marketplace, that's not the reason at all. It is purely seen as an opportunity. It's an offensive move rather than a defensive move, if you think about it that way. And as I was alluding to, it offers us completely new capabilities, which we think are completely unique as well in the marketplace, in addition to what we have already. Obviously, we've looked at how long would it take to develop similar things ourselves or do it from other sources. I have been taking into consideration in the price we paid as well as then I was alluding also to the customer set and the references that we get from the customers that that model already has and then finally just maybe quite a bit my sarcasm on the financial map that you did that was last year this year is As I said, we only can comment at this stage what Asmo had at the time of signing, but there was more than half a year to go by that time.

All right. You didn't comment about the payback period.

No, and we don't typically give you our own business cases and payback periods or anything else on any M&A we do. We believe that this is a good investment from a shareholder perspective, and we have our business case where we do have a payback period on this with our expectations. And maybe the last comment on just the numbers that you called here. Of course, this is a fixed part of the payment and a variable part of the payment, and part of the variable part is based on the financial performance on then that would have to happen in order for us to pay the full amount of 130 million. And I'll just say this way that if we would fulfill that business case, I think it would be a fair and a good business sense to pay the full 130 million.

All right. Fair enough. Interesting to see your further disclosure on this topic. Thank you.

Thank you, Matti. Next, Valtteri.

Hi, thank you. Two questions after these two gentlemen that did a good job asking all my questions basically already. The first one, if you look at the data center order growth, can you give any kind of estimates on how much is explained of How much is by volume component and how much is by price component?

It's really driven by the beliefs.

Okay, okay, very well, thank you. Then the second one, you said that the quarter in actual measurements was extraordinarily good. Can we interpret that in a way that you do expect some Do you have any kind of moderation in the demand now in H2?

Don't interpret it that way. It was extraordinary good compared to the past. No remarks, no references, no connotations towards future expectations.

Okay, fair enough. So I guess you are just being cautious on not increasing the guidance, as always. Is that correct?

Our guidance is reflecting on what we think is the right guidance. Fair enough.

Okay, that's all from me.

Thank you, Valtteri. And then Pauli.

Good afternoon. I also wanted to ask about data center orders and specifically because those are quite long projects. So, like, in what part of that construction or commissioning process Your equipment will be sent to those customers. Let's say if there is an order today and it will be commissioned in let's say 29 or 30, when do you deliver?

Typically these days when we get an order it is for a data center that is expected to be operational in a year's time. So if we today sign a deal with somebody typically that the The president was building a data set, he was expecting that data set to be operational in a year from now.

Okay, that's helpful. Then, I think in the industrial measurements, there was a growth in fixed cost days, almost 3 million euros. So, could you open up the drivers behind that, and do you expect further growth in the following quarters?

Yeah, so part of what has led into So first of all, I'll take a step back. So I think it's kind of destined to a very good execution over time in order to be where we are today in terms of being able to highlight two new segments that are sizable enough worth highlighting in terms of their being data centers and power. So we have been consistently and consciously investing into those and building those. That has meant also that we have invested into those segments so that we have Some dedicated resources driving both the offering and also kind of starting to have more in the how to package it in the go-to-market side and how to approach the customers as it starts to be big enough to merit them. Part of the investments that you are seeing in the fixed cost of the OPEX side are exactly that type of investment that that are invested into areas that we see for further growth opportunities, which merit dedicated investments, either, well, mainly on the offering and the as-and-gold market side.

So, should I interpret that the run rate of fixed costs has increased, or whether kind of one of big bonus items because of high orders, or?

We continue to invest into our operations as we have been. If I look at the total company as an example, as Heli was saying, going through the financials, our net sales has grown in terms of constant currency, 7% during the first half, and our operating expenses have grown 4%. So we do invest into the operating expenses in order to grow the company further, but we do it in a scalable way.

All right. Then about the expected profitability, there's also some increase in fixed costs and of course profitability improves year on year too, but do you expect any significant Thank you very much.

Ron is very much on the numbers space, but looking at your funnel, you look at the conversion rates, you look at your retention rates, so you can actually see a bit of visibility from your sales and marketing investments into how they turn into future revenues and profitability as well, or margin.

All right. Thank you. That was all from me.

Thank you, Pauli. Do you have any other questions?

I don't see any hands up, so... And one more time, apologies for all the technical hassle that we have had at this time, and we'll make sure that it's not going to be repeated in the future calls.

Yes. Thank you for your questions and for joining the call, and I wish you a very nice week and rest of the summer. Thank you, everybody.

Thank you.