Enea AB (publ)

Thank you and good morning to everyone. This is Temo Salmi, CEO of Enea speaking here today to take us through the Q4 result in the next coming 30 to 45 minutes. Our agenda will be very much similar to the previous reports that we have made. We will have a short introduction of some highlights in quarter four and then we will deep dive deeper into our financial results and we will also end up with a way forward and outlook for the year and the years to come. So let's get going with a bit of market and business development highlights from the quarter. Of course, I think we all see what's happening on the geopolitical scene and that the tensions and the development there are driving the demand for secure and controlled national communication solutions. And we see also a more nationalistic approach in sovereignty and when it comes to handling data. which is actually playing us well into our hands in Enea. Our solutions is definitely supporting nations, states and other governmental institutes, as well as telco operators to up their security posture. We have had a tough year in 2025 with the FX. Swedish krona has strengthened almost 20% towards the US dollar in the last 12 months. And it's... 15 years since that happened last time in 2010. So it's nothing that happens every day. Obviously, having a majority of our net sales in US dollars, it impacts our reported results, which we will come back to later on in the presentation today. However, our underlying market development remains positive, and we actually have also good pipe for the future in building. If we look at the business side, like I said, our underlying business development remains positive across both our focus area security and networks and in constant currency. Both of them are actually growing in the quarter and our core offerings continue to develop very well in particular traffic management and our deep packet inspection. where we've had almost 20% growth in the deep packet inspection, over 30% growth in traffic management, which is positioning us super well for the future and to the continued growth that we anticipate accelerating now moving ahead. Another thing that we really see taking off now is that our government customer base is increasing. We have announced three deals only in the end of the previous year in 2025. And we also have a good momentum there. We have other opportunities in the pipe as well in that segment, which is very good for us because it's going to diversify our customer base for Enea that today is quite heavily depending on CSP environment. So this is really good for us. Last but not least, I also want to mention a couple of words about cyber. You know, we mentioned that cyber is something that is growing in the world. And unfortunately, we were also a victim in quarter four for this criminal activity. However, we were able to contain and execute and handle That cyber incident in a very good way, I should say. And today it's handed over to authorities for an ongoing criminal investigation. So I will not comment on that any further. We have had no financial impact and there's been no impact to our customers either from this incident. In the quarter, we have reported or signed 10 new customers, five in EMEA, three in North America, and two in Asia Pacific. And you can also see here in the textbooks which solutions it's all about. It's about our growth products, traffic management, our IX engine, our DPI solution, and our firewalls. So that's good. Great development for us. And that momentum will accelerate in 2026. Moving on to key numbers for quarter four. We report a net sales of 239 million Swedish krona. which is a reported decrease of 5% from Q4 last year, but it's a growth of 1% in constant currency. So the FX is still hitting us bad, and Q1 will still be, comparability-wise, a very tough quarter for us because Q1 in 2025 was still a quite strong quarter for the US dollar. And we see that the US dollar is continuing to weaken against the Swedish krona now in the beginning of this year. Something that we are very proud of and I am proud of is how we are working with our profitability. We are reporting the highest quarter for profitability in four years with an adjusted EBITDA margin of 40%. Obviously, that is good and paying us in favor when it comes to future investments. Now, when we're going to accelerate and put our new strategy into motion and i will come back to that on already in the next slide and talk about what we have done and what we anticipate to do in order to accelerate our growth in 2026. Earnings per share 2.21 in the quarter and operating cash flow 45 million. And of course, we continue to invest in R&D and R&D for us is the key and critical ending to make sure that we continue to stay as relevant as we are today for our customers and for our future customers as well. On the full year, we report a net sales of 889 million Swedish krona, which represents a 2% drop in reported numbers, but a 2% growth in constant currency. Our margin is on the same level as last year. Our adjusted margin ends up at 33% and operating cash flow of 107%. million Swedish krona. We're going to dive deeper into these numbers in the section with Ulf a little bit later on as well. And also a couple of comments on the margin maybe there. In the quarter, we had a good business mix. We had proportionally sold more licenses in quarter four, and also a bit of tailwind from the FX as well, because we have a lot of our costs in euros. So helping us to achieve that good profitability. And of course, that higher license sell that we had in Q4 will eventually also turn into support and maintenance and professional services revenues in the coming years as well. Right. Let's take a couple of words about our strategy. We launched our strategy in Q4 as well, which is basically built on three pillars and market acceleration, vertical expansion and offering evolution. And in short, we can say that market acceleration is about investing in our sales and ensuring that we penetrate the markets where we think that we have a good potential to win and to accept or to accelerate our growth so we have decided to invest in in latin america in our in selling our telco portfolio there we have already good presence in latin america with parts of our portfolio with our firewalls portfolio and we need to leverage that also to sell the rest of our portfolio so do some cross-selling in latin america North America is one of our strongest regions, and there's still more to do in North America. So we're going to double down on North America investor as well. And then in Asia Pacific, we have good momentum, both with our telco portfolio and our embedded security portfolio. And also the government sector is developing nicely there. So we want to invest in order to grow faster in Asia Pacific as well. the vertical expansion it's more like broadening our customer base how can we take our existing offerings and solutions and and sell that more wider so obviously mentioned already several times but one vertical that is super relevant given also this time of the world with all the geopolitical development intentions, the government sector is investing heavily, national security is pouring money into building up and maintaining sovereignty around the world and we will of course want to be part of that journey with the good solutions and offerings we have in that sector. So we are investing in both our selling our traffic management and our embedded security solutions into the government sector. And I'm going to come back just shortly to talk a little bit about some of the recent wins we've had in Q4 showing that we are already doing this and that we are already building on this relevance for the future. Last but not least, there is also a a tier two or a mobile virtual network operator segment that is very important for us so we will also make sure that we target that customer segment with our solutions and we are developing our offerings for more sauce ready business model addressing that customer base as well And then in the offering evolution, finally, it's all about securing that we stay ahead of the curve and that we stay leading in the world like we are today. So that's more about building and developing our current offering and also looking at what potentially could be complementing our current portfolio, looking outside of Enea as well. So what have we done so far in the market acceleration? We are building our sales organization that is much more customer cent centric than a product centric organization. I have recruited already a chief commercial officer that will start now in quarter one. Unfortunately, I can't name that individual yet because of confidentiality, but that will be communicated shortly, I hope. This will accelerate our investments in sales and making sure that we push the needle in bringing our offerings to the market. And then also strengthening the sales organization by simply employing more salespeople in those dimensions that I showed on the previous slide as well. We will do this in a controlled manner, of course. We will now start investing where we already see traction in order to make sure that we also secure that growing business that lies ahead of us. In the vertical expansion, like I said, already in quarter four, we have communicated some wins. We have communicated two government wins, one in Asia Pacific and one in Africa during fourth quarter, where we have sold our DPI solution to one government and our telecom and security offering, including also DPI to an African government. Basically, this helps and ensures these governments and nations and countries to stay on top of the security posture by getting full transparency of the network communication going in and out of the country. And there we can help. We have world leading solutions for doing that. And this is a proof point of that journey that we're starting into growing into the government sector is real. It's happening. And I see in front of me that that will accelerate as we move ahead. Good. On the offering evolution, there's nothing new there yet. I mean, we launched a strategy in the fourth quarter. There's many things that we are planning to do. We are investing quite a lot in AI, and I'm going to come back to that a bit later on to tell you a little bit what we've done in AI. We are also repackaging. Some of our offerings like our traffic management and our firewalls to become a as-a-service solution, so we can target Tier 2 operators that necessarily don't need as much of configuration when deploying our solutions as the Tier 1 CSPs needs. We're also repackaging our offerings to fit another tier and another customer base, which I think is good for also accelerating the growth of our predominantly our firewall business and our traffic management business. More to come here later on in the year. Some of the highlights, I've already mentioned some of these, so I will not repeat them. Excuse me. Maybe a couple of additions. We have in North America during the quarter also secured a customer text now, which is an operator, a CSP in North America that predominantly competes with free texting and is now also going into the space of free calling. They have chosen our firewall solution to actually deploy that in their operations, and we're very proud to make sure that we continue to show in North America as well as globally that our firewall products are super relevant for the future. And also in the communicated late in December, a prolonged partnership with an European tier one operator for a cloud native access control solution. This partnership is securing our cooperation for the next coming seven years. And we come from a long partnership already shows just the relevance of what we're doing together and prolonging this for the next seven years to come. Coming back to what I spoke about AI a couple of minutes ago, what we actually are doing, we are not talking about AI as a hype. We actually have AI as part of our solutions today, and we are continuing to deploy AI-based software in our offerings. Here are a couple of examples that I would like to highlight for you, starting from the left with our messaging firewall. For our CPaaS customers, when they are sending messages, of course, messages have different priority. One example being, of course, multi-factor authentication passwords needs to be delivered immediately in order for end users and consumers to be able to sign in whatever they are signing into. while maybe commercials can be sent throughout a certain time span. And of course, the price for sending these kind of messages is different. And we can help our customers optimize their revenue base and their cost base by, with our AI solution, defining when and how these messages should be sent based on the price pattern that is available. For the traffic management solution, we are working with the mobile operator in Europe, where we are looking at, with the help of AI, how we can predict traffic congestion in the network. And also, well, of course, secure that our customer delivers the best quality of service to the end users. And part of this solution, we also have an AI solution that optimizes video content. So you always have the best end user quality of service when streaming video through the mobile networks. Last but not least, our Cosmos IX-ND DPI solution together with a mobile operator in south africa we are classifying the traffic we are also able with ai now to classify encrypted traffic which makes our solution future proof to a certain extent we are not yet able to to classify 100 of of encrypted traffic but a high relative high percentage point of traffic can already now be be classified even though it's encrypted so this we are testing with a mobile operator in South Africa right now and we are hoping to be able to scale this very shortly as well let's see here now what happened here okay then we continue to My last and final slide before I will hand over to Ulf. Of course, we continue to drive the thought leaderships across our ecosystems. We are very visible. We are invited to speak in different conferences. And we go and we are. But this quarter, I wanted to highlight some of the recognition our products has been getting out in the world. And if we start from the left, we have the The Kaleido Intelligence Award that we won. Kaleido Intelligence is a respected independent research and advisory firm specializing in telecoms, roaming, and digital infrastructure. And we were recognized as champion vendor, which is the highest vendor category in this award for our signaling and security firewall capabilities. And we're super proud of that. And we were acknowledged for our leadership in delivering intelligence driven signaling security in all spectrums of mobile networks. Super good. Very nice. And just showing how relevant our firewalls actually are. The second prize. In the middle is from Uniper Research, where we have been winning the platinum category, which is the highest category. And this category highlights solutions that use advanced analytics and AI for image detection. And our messaging firewall solution was recognized for our restricted image detection, which uses AI to detect images that violate industry guidelines and best practices. So basically we are able to review and understand what kind of image is as part of a message before it's sent and then block it if it contains content that is abusive or violating whatever rules that have been set up. Last but not least, we have the Fast Mode Award where we, in the category of video experience, we have been winning with our solution traffic management. Fast Mode is a leading industry platform that analyzes and recognizes innovation and performance across telco, cloud, and digital infrastructure. And we were recognized as the video experience leader for traffic management, as I said. and it focuses on on that our solution how we enhance our video quality by intelligently managing network traffic to ensure consistent high quality user experience we are very proud and happy for these wins and and it just shows once again that our solutions are are very relevant good and future proof building the way for future growth for enea With that, I would like to hand over to Ulf to take us through some of the financials. Ulf, please.

Thank you, Timo. Let's see here. So we are reporting a 5% decline in the quarter but in fixed currency we report a 1% growth and you can see the seasonal variations between the quarters during the year. This is typical that we have a strong quarter four but this year we didn't reach the quarter four for previous year. In reported figures for the full year, a decline of 2%, but in fixed currency, 2% growth. In the quarter, we are proud to present a report the 40% adjusted EBITDA margin, which is highest in many years. And we can see also that compared to the previous quarter last year, or quarter four last year, we report a 7 million increase in absolute figures. And reaching this EBITDA level is of course a combination of sales and cost. But on the cost side, we have stable cost development. And also, we have had some impact from FX development on the positive side for the results. uh we also probably report a 25 21 percent uh ebit margin for the quarter and uh reaching uh 48.9 million in q4 compared to 45 uh in court for last year and this uh translates down to earnings by share in two point to one for the quarter compared to 4.7 quarter for 2024. Looking into the revenue split within the different product areas in security solutions, we can see a strong sales of license for the quarter. Professional service and support and maintenance are quite stable, but the main increase has been related to more license deals in the end of the year. Similar pattern actually within network solutions, Q4 2025 was higher than Q4 2024 in license sales. professional services and support maintenance are quite stable, although we had a step down in support maintenance with some contract terminations in 2004, which leaves us on a little bit lower level in 25 going forward. However, based on that, we are now also signing new license deals. We will expect a good development of support maintenance contracts going forward. Looking at the product areas, the development between the years, we can see a decline in security and also in networks. But in fixed currency, we report plus 2% growth for security area and plus 1% within networks areas. Operating systems are declining 3%, but this was actually a lower decline than expected. So we're happy to report that. And overall, a plus 1% growth in fixed currency. The same analysis over the year, we'll see a 4% decline in security areas, but flat development in fixed currency. And with the networks, we see a flat development in reported net sales, but an increase or a growth of 5% for the networks area in fixed currency. One item that has been on the board this year is the development of the financial net and for this quarter we can report less exposure in financial net and the figure for quarter four 2025 is currency net of minus 2.6 and in the graph to the right you can see the development of the us dollar compared to that to the swedish krona and in quarter four last year we had a quite a big increase of the dollar rate which left us with a quite positive currency net for that quarter now we have a worked with our balance sheet and reduced our exposure so these swings will be less or limited in the future in the cash flow analysis we can also see the effects here on the financial net in quarter four this year we have minus six and what for last year we had plus 41 that gives a quite a big impact On the cash flow, however, we want to reduce these swings, and that's what we have done now. Compared to Q4 last year, we had amortization of our term loan of 15 million euros, so that figure is higher than normal. But for Q4 2025, we report the total net cash flow of plus 10 million. Our net debt is 208 million and our balance sheet is strong in terms of capitalization. We have a headroom for leverage going forward based on the stable capital situation. And finally, in the quarter, we bought back 166,000 shares to a value of 11.8 million SEK. And this program continues until the annual general meeting in May 2026.

Good, thank you Ulf. And before questions, we will round off a little bit with the Key takeaways and guidelines, some key takeaways from the fourth quarter. Like I said, we have a very strong profitability building for the future, best quarter four in four years, and the EBITDA margin of 40%. In constant currency, growth continues in networks and security, one respective 2% in constant currency, and we intend to accelerate this growth in the year. We have good momentum in our government business. Like I said, two strategic customers signed in quarter four and I hope more to come in the coming periods. And of course, on the negative side, our headwind in FX continues, which has been putting pressure on our reporting numbers in 2025. And like I said in the beginning of the call as well, I think first quarter of 2026 will still be comparability wise quite a tough quarter given where the dollar was standing in the first quarter in 2025. Then we should see starting quarter two, we should see improved comparability numbers year over year, unless of course the dollar continues to drop compared to the Swedish krona now in the beginning of 2026. uh on the short-term outlook market remains stable to positive i think our pipeline is is fairly good and we have a relevant highly relevant portfolio for the markets and segments we're serving and the diversification that is now starting for our customer base is great and building for the long term uh development of Enea and of course gives us also access to new and bigger revenue pools as well. So this is good for continued business development for us. And one of those pools is the government sector, which is growing well, and we will continue to focus on that heavily in 2026 and years to come. And then, of course, like I said, the FX head winning Q1 will put pressure on us comparability wise still. So that's just a fact that we know, given where the dollar stands now and where the dollar was in Q1 in 2025. So our guidance for 2026 is a single-digit growth and an adjusted EBITDA over 30%. We will make some investments in 2026. That is then of course the starting of the acceleration of our growth to be able to then meet our long-term financial ambition which we presented during fourth quarter last year. And that is to have an average growth over 10% on an annual base throughout the full period of 2026 to 2028. And you can already now see that it's not going to be a linear growth because we are saying that our short-term outlook is single-digit growth for this year, but we stay firm. And we believe strongly that this is something we can make in the next three years to come. And we're also saying that our profitability at the end of the period, when we exit 2028, we will have an EBITDA over and above 35%. So this is our long term guidance that we keep from our strategy that we communicated in quarter four. And with that, 30 minutes as promised or 31 minutes, I will then actually open up for questions and answers. Operator.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad.

Right. We have some written questions here. Let's take them in order. We have a question from Mattias. Why did the order bonanza in quarter four not translate into higher growth? Well, I mean, the business mix that we're having, I think that we have our normal business and we had some good wins at the end of the quarter, right? uh i think that it's it's paving the way for the future but i mean it is the total business mix that gives us the result where we're standing today and we have another question how come there is no growth in q4 despite the large announced contracts that's the same uh question as we had before uh can you comment on the decline in operating cash flow before changes in working capital

Yeah, partly that was explained by the big swings in the financial net. We reported a positive 41 million in the financial net in Q4 2024. And now in 2025, we have minus 6 million. And that relates both to our balance sheet composition, but also to the development of the dollar. During the year, we have reduced the exposure, so these swings will be less, but just quarter by quarter, we see a big swing here.

Thank you, Ulf. And then we have a couple of questions here from Rasmus. Growth constraints. What is the number one restraining factor in your growth today? Is it driven by market dynamics or the current market cycle? Well, I think that there's a couple of things that we are now restructuring and reorganizing a little bit how we do our sales. Like I said in the beginning, we will be much more customer centric and we will also be selling a broader portfolio to our customers which we haven't maybe done in the past. And we are also now getting a more focused setup on our sales. I think that there's a lot we can do in our sales. We have a great sales force, but we just need to focus it in a bit of a different way. The market dynamics actually are positive. So I think that, you know, and the development, even though it comes late in the year and in 2025, I think the momentum we have to diversify our business is good. Right. So that's also answering the second question. How confident are we that we can grow in 2026? Well, we are fairly confident given where we stand and what we see in the dialogue with our existing customers and with our new customers. And we look at our pipe. So and the investments we are doing, they're not going to pay off immediately. We have quite long sales cycles, but we will eventually also see good results from the investments that we are making both in in sales and product development the last question is for you networking capital relative to sales seems to have been growing for several years is there any specific within this that is causing the increase um our business mix and the the deal mix uh customer base mix is we have a increased uh

development in areas in the world with a little bit lower or longer payment patterns. And I think that's one explanation why we now see a slight increase in the working capital. But that's something we are working on. take the challenge and solve the problems with the customers, of course.

And I think one comment to that, if we look at Q4 isolated, actually our working capital is declining year over year, quarter four. So we are on top of it. We are not happy with it. And we, of course, are actively working with getting it down. You mentioned good pipeline and better billing going forward. Can you elaborate on the better billing? What do you mean better billing? Sorry, I cannot recall I said better billing. But the good pipeline, I can comment. I mean, we have a We have a solid pipeline in both customer segments of both and all customer segments. I should say where we are, where we are working. We've had some push outs of some deals that we've been working on and not not necessarily saying that we are losing them or we have lost them, but our customers are taking a bit longer time to decide. And we are positively looking at materializing these deals in the coming quarter and adding to that fairly stable and good pipe gives me confidence that we will be able to turn this around into growth numbers. Also, hopefully in reported numbers, obviously, FX is nothing we can do anything about, but that is definitely ambition. Yes. A question in Swedish, I will translate it into English. What can one expect when it comes to growth within security in 2026 and up till 2029? We are not guiding on the segments or focus areas, security and networks in our guidance. It's the business mix in totality that will deliver the growth that we are seeing. But of course, Personally, I see good momentum both in networks and security. And we've also seen that in the recent quarters that even though we've had a different business mix in quarter four, that they have been growing steadily previously. And that's what I perceive going forward as well. Your SG&A is down quite a lot. Is that really sustainable? Given dollar weakness, will you be able to increase prices over time? Ulf, do you want to comment on SG&A?

This increased prices over time, I think it's a development and our product mix and product capabilities and features going forward, we see a possibility to have a good price development for the customer.

Yeah, and it's a competitive market, right? I mean, we also have market pricing. We are unfortunately not alone. So, of course, competitive pricing. But we, of course, try to stay ahead of that when it comes to feature development, our investments in AI, and all of that is going to make our product stand out and be better than competition, where we also are able to price that. So, of course, we're investing quite a lot in R&D, as you can see, and that in itself is going to make sure that we have a headroom and tailwind when it comes to how to price our products compared to competition. Where are we there? Does your growth guidance for 2026 include FX? No, it includes FX. It includes FX. So our guidance is in reported numbers, if I put it like that. So it includes FX. Are you hearing that customers are shying away from US and Israeli competitors, i.e. are you benefiting as a Swedish company? Very good question. Even though it's been an early days to say that, but at least the dialogues I have with our customers, I definitely see this. Yes, we are very positioned to be a Swedish company in this geopolitical turmoil that is seen. Sweden, as a nation, as a country, is still seen I wouldn't say as neutral, but at least as a trusted partner, someone you can trust in and have a long-term engagement with. So yes, I hear this discussion more and more. And another topic I hear, especially in Europe, is about data sovereignty and how can we rely. I mean, a lot of European companies, of course, are relying on US-based cloud providers for ensuring their operation. works and of course that question is sparking also now a lot of dialogue about how can we trust our current allies or our previous allies for the future in order to secure that there are no problems or issues with services that are being delivered today. So I don't know if it's good or bad. But the nationalistic view and world getting smaller again, is a fact. And we of course, have to navigate that and play our cards well there. And I think that we are super well positioned in that dialogue as a company. Those were the questions written. Do we have any more? If not, then I'd like to thank you all for listening and I will hand over the call back to the operator. Thank you for now and have a good day ahead. Thank you.