Bittium Oyj

Good morning, everyone, and welcome to this webcast on Bittium's Financial Statements 2025. My name is Karolina Malmi. I'm Head of Investor Relations, Marketing and Sustainability at Bittium. And with me here today are our CEO, Petri Toljamo, and CFO, Petri Hiljanen. A few forward-looking statements quickly. Just to mention, by their nature, they involve risk and uncertainty and may differ from actual results. And about the agenda. Quickly we start with some highlights of 2025, then CFO will walk you through our numbers from last year and then we continue with business updates and finally outlook for this year and time for Q&A at the end. However, you are able to place questions at any time by clicking the button on your screen and we will address them at the end. But without further ado, I will let our CEO Petri Toliamotu start.

Thank you, Carolina. So I'll start with the highlights of the 2025. Shortly, I think we had a pretty good year. So first, I think that we are able to say that on CMD September last year, we defined a new growth strategy where the theme is that accelerate international growth. I think this is proceeding as planned. Second, our order intake grew to 153 million, roughly from 100 million euro from previous year, and as well as the order backlog grew to around the 78 million from the 45 million euro. And this is very significant and sizable amount of the orders we managed to secure on the last year. Then the number three, I would say that the bid team's market position in defense market strengthened significantly. We have been able to make headway on the international market, and I think that we have very relevant position thanks to our advanced leadership on the technology side. And fourth, if we summarize the year, the net sales grew 40% year on year, while the operating profit was 16.3%, and EBITDA was 32 million euro, which reflects 27.2% of the net sales. Then I'll hand over to our CFO, Petri Hiljanen. He will go through in detail the final CL path, and I'll get back to then us.

Thank you, Petri. So let's first walk through the Q4 financials, the highlights there. So our Q4, we delivered record high sales. Their sales reached 54 million, and it grew about 63% year on year. And this year is clearly a breakthrough for Bithium in the international market. So we got good new customers. open up new markets, so this is a good result for us in that sense. Also, we need to keep in mind that the Q4, the comparison period 24, was already quite strong, so relatively the strengthening has been quite phenomenal here for 25. Growth was fueled by defense product sales and at the same time medical and engineering services remained about the same level as last year. As you can see from the graph there, so at least for the sales, it's typical for us that the quarterly fluctuations are quite substantial, and this is also the case for 2025. Our operating profit reached 15.4 million. There's an increase of 9.4 million from last year, quarter four, 24, and the operating margin was thus 28.6%. And then there, as mentioned earlier, so high volumes and unfavorable product mix contributed to this increase in profitability. EBITDA reached 23 million, and last year it was 8.6, so it's a hefty increase there at EBITDA level as well. Full year 25, as Petri mentioned, so it was 40% growth in topline sales. It reached 119 million. And as I said earlier, the growth was driven by product sales in defense and security segment, engineering and medical, they remained pretty much at the same level as 24. Full year operating profit, a key measurable for our business, was €19.4 million at the margin of 16.3%. And one should keep in mind that there's also close to €1 million of one-time cost included in the operating profit. This... Sales, the structure of sales, as we can see, is heavily driven by the product sales, which is very much in line with our long-term strategy. Full year EBITDA reached 32.4 million, and it's about 27% of our net sales. Some words about the R&D investments, so we continue to invest in the core technologies, however, the relative percentage fell a bit from the historical numbers and also it's a little bit less than the strategic target. It was 12.9%, but it's explained by the high sales in 25. But anyway, so we're committed to these strategic targets to develop our products and offering. Related to the investments, there's also some added higher depreciations that we took on the defense and security business products and historical development cost, and that's also explaining a bit on the increase of the R&D expenditure. Some key items, takeaways from the cash flow. Cash flow was negative for full year. It was a little bit less than €1 million negative last year, 24. It was exceptionally high. There were one-time items related to historical projects. Now, as we go forward with the growth, our growth sales grew so heavily, and it also drove the accounts receivable to quite high level, which of course then increases networking capital, decreases our cash flow. We also took measures to secure inventories for future deliveries. So those are the primary reasons for higher networking capital. Some words about balance sheet. So Bitium's balance sheet is very strong. Our equity ratio is 71%, and then it's... And also we are net debt free. So those are the key items that are providing us fuel for future growth initiatives. Then again, from business and operations side, there's definitely items related to networking capital that are, you know, have been increasing, but then again, they are supporting our short-term business activities as we go forward towards 2026. All right, so I will hand over now to Petri. Thank you, Petri.

So after this final sell part, I cover then the business segments, starting with the defense and security. So on this business, on defense and security business side, I think this overall, we grew last year 45% year on year. Now this year we managed to grow 65.8% year on year. So if we look this overall macroeconomy side, I think these uncertainties and changes in global political environment continued. And what we are however seeing now is that After the Ukraine war, there was a kind of peak to purchase the guns and ammos. And then, of course, we have some infrastructure now. We are clearly seeing that these investment defense funds are being kind of focused more and more in the future, in the modernization of the military communication systems. And like mentioned in the highlights, our market position has strengthened through the technological leadership in the military communication. So, 25 for the defence and security was the record year for the order intake, 121.8 million euro, and order backlog of 70.9 million euro. We received new orders from the Finnish Defence Forces and Austria and Croatia and other customers as well. We signed also a frame agreement with the Swedish Defence Forces and also we signed a sizable licensing deal with Intra for our tough SDR radar technologies. The quarterly development on the fourth quarter, we grew defense and security segment 90% year on year, and this is a very high number. And even if we had a tough compare on the fourth quarter, 24. Let's look at our progress on the international market. With Finnish Defence Forces, we have been collaborating since 1989. and we are continuously receiving orders from them. If you look at the other countries as well, so 2016, we started collaboration with Estonia, 2019, Austria, and we received a large order from Austria on the fourth quarter last year, so it basically proves that This is not just a one or two, three-year type of the project. Actually, it will last pretty long while we are continuing to equip that specific country in question. Croatia, 24, we signed a frame agreement with BAE Systems, and we opened last year office to London. 24, we also signed two frame agreements with Lockheed Modding, And like mentioned, in 2025, we signed a framework agreement with the Swedish Armed Forces. However, there are no POs yet, but naturally, we will expect those to arrive at some point. Then there's this mystery country from Europe, which we have not been able to disclose. We signed that in 2025 for the Special Forces. And now in December, we signed the licensing agreement with Intragroup for Bittium's SDR technology. Just as a recap for this Indra deal. So we signed in December licensing agreement with Indra and based on the current forecast, the total value of the agreement is estimated to be over 120 million euro. Out of that 50 million euro first purchase order was received last year and that caused a positive effect on our final sales outlook for 2025. In January this year we received second purchase order valued at 20 million euro and this is related to technology and production transfer projects and now with this licensing we will help Intra to develop and manufacture different kind of handheld vehicular and man-pack radius with the main focus on Spain, with the potential to expand that to select its countries as well. The key point here, however, is that Pitti will continue developing and supplying its own tactical communication products and radius for its customers globally. Few words about the medical. So at CMD last year, part of the strategic change, we decided to focus on the medical side. We had a four product lines now we are going to focus on two namely cardiac and the sleep and this what we have been now strengthening after this change and and we have clarified the roles and responsibilities within the organization and if you look the numbers revenue remained flat year on year but the overall operating results for 25 was positive when excluding the non-recurring items we had on the second quarter. And since the second quarter, the second half was positive on the operating result point of view. Then with our key customer, Boston Scientific from the US, we continued the collaboration and and we signed a new agreement in June with them for the next three years period. Also this cardiac site sales outside of the US remained moderate during the fragmented market. With the Sleep Apnea product family, we have been working with the multiple pilots in different countries and the focus is now to find and sign agreements with the strategic partners for sales. On the fourth quarter, medical business grew 4.3%. Then on the engineering service, In general, I think that ongoing customer projects are proceeding well. However, many customers are postponing their product development investments to the uncertainties in the market. What is positive for us is that roughly half of our revenue comes out abroad, outside of Finland. That has helped us to overcome maybe the kind of challenges, especially in Finland. In 2025, from the numbers point of view, we were flat, 0.5% year on year. We have said that the profitability was affected by the investments what we are doing as we are renewing the focus based on the latest strategic change towards the embedded AI and defense market. And in order to prove that point, 24-25 cross-margin levels were at the same level. So this is what we have been investing in kind of purposely. to make sure that we are able to shift the focus more embedded AI and defense market. Our cooperation with Terrastar continued well for the satellite terminal concept. And also with this embedded AI, we launched the cooperation with the Qualcomm company called Edge Impulse. And also as the BIT team made an investment to Marshall AI, which is serving also the other business segments as well, they are also proceeding well with the engineering services as well. And now the main focus for this business is to grow the defense business market, and they are in the funnel, multiple opportunities we are trying to close at the moment. Let's then look at the shares and the shareholders. Share price last year grew 371% year on year. This is really remarkable. The number of the shareholders has also increased. We have now total 27,895 shareholders. Fund ownership is 6.9%. And by the end of the last year, foreign owners was 6.7%. But what we can basically now say, we are at the 10% level. So this seems to be clearly growing. Just to recap what we set for the strategy, really the focus, main theme is to accelerate international growth. We have divided four pillars to support the growth strategy. First is accelerating international sales and developing strategic partnerships for growth. And this is applying for all our business segments. Second, we really want to be the technological forerunner to seek competitive advantage from the technology. And we have said that we are going to strengthen the software AI capabilities and our investments to the Marshall AI is one proof point there. Third, we plan to expand to new markets and the verticals, especially in the defence and security, exploring also these inorganic growth opportunities. And this is where we have been pretty active. Nothing to be announced yet at this point. Fourth, we want to make sure when we are scaling our operations and our tools and the systems, we don't want to double the cost while we are growing. That's why we have to really transform ourselves to data driven scalable product operational mode and this is also proceeding well. To go for the outlook for 26, so we estimate that the net sales in 26 will be from 140 million euro to 155 million euros, while we were at 119.3 million in 25. Then on the operating profit side, we estimate our operating profit in 26 will be from 26 to 32 million euros, while in 25, we were at 19.4%. What we have also said here that the operating results will be affected by the depreciations related to the license income from on the defense and security business side, which will be received in 26. Also, we are saying that the net sales and operating profits are expected to be weighted towards the second half of 26, like it has been in the previous years as well. Also, the timing of net sales and operating profit between quarters may significantly be influenced by the individual orders or deliveries. And just to remind the long-term financial targets on September, we revised and upgraded our long-term financial targets. So on the revenue growth side, we plan to grow from 20 to 30%. Of course, if you look 25, we managed to grow 14.1% exceeding our long-term financial targets. Operating profit level, we have set that our long-term target is to be at from 10 to 20%. And we were within that frame in 25 receiving 16.3%. And this update is driven by the strong growth in defense markets, which has accelerated the development of the BitTeams defense and security business. Then let's look at the investor calendar. So what we are doing this year, we will have the AGM in Helsinki on 22nd of April. Also the first quarter results will be published on the 29th of April, second quarter and the first half on the 7th of August and third quarter 29th of October. Just to summarize where Bithium is now, if we look what we have been able to achieve and what is our position in the market. First, we are seeing that there's significant short and long-term growth potential in all of our business segments. We have strong megatrends driving market expansion and we are present in large rapidly growing market in all of our business segments. Like we heard from our CFO, Petri Hiljanen, we have strong balance sheets and we have had very consistent financial development, which will provide further fuel for us to continue the growth. We have world-class next-generation products and services, technological leadership in next-generation software-defined defense communication, and we are working with a very solid and diversified Tier 1, a blue-chip customer base. And we have very committed and highly skilled people, which is putting us in an excellent position to accelerate the international growth, as our strategy is based on. So I would say that now it's time for the Q&A, and I'd like to invite the CFO Petri Hiljanen with me to provide the answers.

Thank you, Petri and Petri. So here are a few questions. So current Q424 report says that Bithium is now in active discussions with more than 10 different countries about various tactical communication modernization needs and the potential for projects varies from few tens of millions to several hundreds of millions euros. What is included in the current financial guidance? So the current customers, their potential extra orders, or is it also based on new customers and their orders?

That's a good question. But I would say that I think the start for this year is different than the start of the previous year, because we have very strong backlog. that we were able to start this year. There are assumptions that the existing customers, in addition to the backlog, will provide further orders for us. And we have said that we will target one new customer for the defense and security market per year. Of course, this is something that we have assumed. And while there are multiple opportunities, those opportunities are not, those are more upside than just that kind of assumption that it would be included in the normal forecast. So I feel pretty confident for this year's revenue targets.

That sounds good. Thank you. So can you clarify the logic and magnitude of these license income related to depreciations, which you expect to affect this year's result?

OK, so I think that on the In overall, the EBITDA level for us is excellent. For 2025, and also what we plan to do in 2026, we have done some discretionary depreciations, which are related to the licensing income for the defence and security market. Beyond that, we have not opened that in detail.

Okay, thank you. Then there is a question about the intra 50 million order from last year. How much of that was recorded for last year and activated for the future?

So we have not opened the exact number to 125, but what we can say that some portion of that has been recorded for 25 and it will be also recorded for the 26 and also most likely for 27 as well.

Okay. Then can you talk about UK tender of SDR Radios or what it is all about?

Yeah. So this UK is just one of those many tenders we are going to participate. And actually we did submit our answers for this tender. We opened up the new office in London last year. We hired senior kind of salesperson there and of naturally this UK is in priority focus for us but I'm not sure if I have any detailed information because I think there will be many other companies quoting that as well and this is just one of those many top priorities for us trying to close this year.

Yes. You mentioned now this year, because here is another question about the timing and schedule of the tender. Is there anything you could share about that?

I don't know all these details, but I would say that we hope that some decision will be done during this year.

Okay, thank you. Then coming back to depreciations and EBITDA actually. So can you comment on the level 26? So regarding the EBITDA also, is there a big difference?

So we have not provided the guidance for the EBITDA. When this five EBITDA was excellent and we are of course seeing growth in EBITDA, but so far we are setting the guidance for the operating profit level.

Okay, thank you. Quite many similar questions here. Also about any potential wins, such as deals related to BITTIUM and BAE framework, or gaining new countries as defense customers included in the 26th forecast, or is it just the base level? So basically, you answered this already.

Yeah, and of course, we are trying to win new countries to get upside. Of course, there are quite long kind of sales cycles still in this business, even if those have shortened. So even if we were able to close more than we expect in order point of view, I think revenue might still be recorded for the 27 and not just for the 26.

Yes, of course. Detailed question, how much revenue do you expect from INDRA in your 26 guidance?

We have not disclosed that number, but like I said, there will be some portion recorded from this licensing part, as well as we got this 20 million PO for multiple years, which is covering the support to transfer the technology and the production technology to INDRA. So there will be some revenue recognized for 26, but we have not disclosed the exact numbers.

Yes, thank you. The amount of new orders is 153.3 million euros, and the revenue expected value for 26 is 140-155 million euros. The orders necessary to achieve the expectations have already been placed. Are there any expectations for the year 26 a bit low?

I would say that this 155 million, what we have in order book, is not everything for the deliveries to happen in 26. Some of those will go 27 and beyond. But like I said, I would say that we have moderate assumptions what we need to achieve for this year.

Good, thank you. And so far, the final question goes to Bitium DAF Mobile 3. So the launch plan was postponed to 2027. How come?

That's correct. There has been some delays, as it is typically with these kind of high new technology cases. So there are some delays on the program, which will impact. And that's why we have said that most likely that we plan for the 27 loans for this tough mobile tree.

Okay, one more question. How large deal would you expect from Sweden based on this framework?

I think it's very difficult to estimate any numbers for that, but of course, typically these kind of new countries start first with the smaller orders And if these pilots or trials are going well, of course, then there's a tendency that they will order in the bigger amounts.

Yes. Then a question for medical segment. Can you provide any new information regarding medical clinical studies you're doing or new products in the development?

So first, I would say on this new product development, I mentioned this frame agreement with Boston Scientific that includes a development of a new product for the Boston Scientific. And what we have also said that we have started the development of next generation cardiac products. And this is something which is still in our plans. We have said that we have to strengthen our competencies and knowledge on both regulatory and the clinical side. And we have strengthened the organization by bringing people which have knowledge on those sides. And yes, they are. In addition to the R&D development, there are some kind of programs ongoing where we are investing on both the regulatory and also the clinical side of our products.

Thank you for these answers. Seems that that was the last one for today. Thank you. Good questions. From my behalf, thank you for the audience as well. Good questions and have a nice day.

Thank you. Thanks.