Invisio AB (publ)

Welcome to Invisio's presentation of the Interim Reports January to June, 2026. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now I will hand the conference over to the CEO, Lars Huygaard Hansen. Please go ahead.

Thank you. Good morning, everyone, and welcome to our Q2 and a half year update. We will run through a number of important topics today. We have chosen a headline for the report, which is strong revenues and significant strategic progress. We saw a good year-on-year revenue growth in the first quarter of about 20%. Our orders intake was a little lower than expected and it was mainly because of timing and also some impact from a temporary US procurement delays. We don't think that any of these orders have been lost, but they have merely been postponed until later in the year. We have also delivered the final part of the radio order that we received back in 2024. And as previously communicated, that had a little lower gross margin, which also impacted us in this quarter. We have during the quarter been approved by the UK MOD for a broader framework contract that for us is important as we consider the UK to be one of our home markets. Last but not least, we have our new products in the market creating a lot of attention. And at the recent EuroSatuary trade show in France, we also launched a new feature called NVSU DroneAware that created a lot of interest and attention. Turning to our sales numbers, as I said, our revenues grew by 20% compared to the same quarter last year. And in comparable currencies, it was 23%. A lot of it was related to Europe. And of course, based on the order book that we had when entering Q2. A little bit delays also here on the revenues in the US. because of the previous shutdown of the government administration and especially also in homeland securities, but we expect to regain that gradually during the second half of the year. The underlying demand and interest for our products is definitely intact despite some of these delays stemming from the US. our order intake was a little lower than last year, and also lower than our own internal expectations, but I would characterize that as the normal business environment with volatility and timing that we cannot always influence. Some of it has been related to the temporary US shutdown of certain government parts, but also a reorganization of the US Department of Defense that has been implemented with the new administration and where it takes a little time before everyone is settled in their new roles and responsibilities. But it should be all in place now. We still estimate that the demand remains intact. We have not lost anything. In fact, I would say that the Budgets are still in place and the last quarter of the financial year in the US is Q3, the upcoming quarter. So we already now see good activity in the US and we expect to be able to see good order intake for the rest of the year. In fact, we have seen quite a good start to the third quarter in July, good order intake both from Europe and US. So had some of these orders arrived just a little earlier, like in June, our order intake for the second quarter would have been somewhat higher. That's the nature of our business. It's been like that for the many years that I have been here. Our order book was about 500 million at the end of the quarter where the majority will be delivered in the second half. We still see that the ability to deliver fast or with reasonable lead times is a competitive advantage that we have and something that our customers value highly. So we try to deliver as much as we can within six to eight months The radio order that impacted this quarter, the radio order back from 2024 was now finally delivered in Q2. There is nothing left pertaining to this order in our order book, so that is all done. Gross margin a little lower than last year, and there was an approximately five percentage point impact from this final delivery of the 2024 radio order. And we see that our new products in the portfolio is going to impact our gross margin positively over time. We have a very healthy gross margin on our own. products. But it is also, I think, important to mention that Invisio is now considered to some extent also as a system integrator, even at a maybe lower level than larger companies, but we are delivering systems. Sometimes it's entirely systems consisting of our own products, But sometimes we are also being asked to add other elements to an order to deliver a full system. The radio order was maybe an extreme that we will not see often. But there are examples, for instance, when we have been delivering Raykel headsets for vehicles where the customers have also asked us whether we could procure a helmet and deliver together with the headsets so that they fit together and the customer don't have to to do several tenders themselves they can do it as one package and in these situations we are of course trying to accommodate and help our customers and that could potentially for certain deals influence the gross margin somewhat but it doesn't influence the gross margin of the Invisio products is merely a consequence of the fact that Invisio is becoming a larger and a more important company in the communications industry in general. So in terms of our operating expenses, they increased about 6% from last year and also continued and were in line with the first quarter of this quarter. As we have said many times, we have a belief that we can continue to grow the company over many quarters and therefore we will also continue to invest in both new product solutions and in our organization to be able to capture and meet the market activity and the demands for solutions that we see from our customers. So regarding margins in the second quarter, our operating margin was 15.3%. It actually improved despite the lower gross margin. And for the last four quarters, we are at 17.7% EBIT margin. We have, as you might recall, increased our target for the EBIT margin from 15 to 20%. last year so we are well above the previous target of 15 and we are now marching against or towards the target of 20 percent so as always it is important to evaluate our development over an extended time frame as quarters will fluctuate and sometimes fluctuate quite a lot as we have seen in the past Our inventory levels are still strong. We have a significant inventory to enable us to make prompt deliveries of larger volumes. Our inventory is not only finished goods, it is also key components and cables and other things that is needed to support a full system delivery. And in addition to our own inventory, we also keep inventory with our suppliers. So it is standard products and components that we have. And I have previously received questions about component shortage. It is not something that is affecting us at this point in time. And we are working closely with our suppliers and partners to make sure we have sufficient inventory that we need for a certain period of time. Cash flow, yeah, not much to say. The decrease is mainly due to the fact that we have had dividend payout in 2026. In previous years, we have sometimes had an exercise of employee stock options that brought cash back into the company. This didn't happen this year, so it was, The cash flow was mainly affected by the payout of dividends. Our cash position is still good. Cash and cash equivalents at the close of the period are close to 300 million. Now, on the operational side of things, of course, I know many of you were present and visited us at the Eurosatuary in Paris, and thank you for that. and you saw yourself the high interest for our new drone awareness capability in the Invisio T30. It is a feature that will be included in the product when we ship from the third quarter and it's basically an ability for the user to detect drones earlier through acoustic signals. So if you are a soldier at the front and somebody is sending a drone towards you, you are given extra seconds to hear that there are incoming drones and you have a possibility to take countermeasures or to hide. And this is something that has really sparked high interest, not only in actual war zones, but also for homeland security in many areas. So we expect this to be a key feature for our already market leading headset, the T30. And this is again an example of how closely we work with end users in many countries. The feature has been tested and proven in combat environments and has been praised a lot. So we expect this to be a key feature as I said. We also see that the interest for the T30 is very high. We are now manufacturing the product in one factory and we are preparing a second factory to start manufacturing the T30 from already now in Q3 and therefore we will have two factories up and running from the fourth quarter and onwards and then we will be able to expand our volume ability in these two factories as we go forward. So this is an anticipation of significant orders for this new market leading headset. In the UK, we have been approved as a direct supplier to the UK MOD under something called the Tactical Communication Systems Framework. This is quite a broad communications framework agreement. It covers other categories than our types of products. It's a broad system and the total potential value of this framework is 8 billion pounds. For us, the importance is that we are now able to go directly to the UK MOD whenever they put up new tenders we can respond directly through our local company Invisio Limited in the UK and as usual when it comes to framework agreements there are no guaranteed order volumes or contract values in this agreement it is a license to operate and we can also see that there's very few in our category that are actually approved for direct For us, this is another statement that we are well established in the UK with our company in Croxley outside London, and we are considering the UK one of our home markets. Eurosatuary, as I have mentioned, was a huge success for Invisio. I think it was the largest Eurosatuary ever, both in terms of number of exhibitors and number of visitors. And I know a lot of you attended and also came to visit us. And I think the defense sector has undergone a lot of transformation and development over the last three or four years for understandable reasons. And this area where we are has definitely developed a lot. There's now a very strong focus on tactical communications, strong focus on digitalization, interoperability, networking capabilities that will integrate soldiers, vehicles, sensors, and unmanned systems in shared information and communication networks. And there's also a trend towards demands for solutions that can manage voice, data, and also power while enabling EFFECTIVE SYSTEM INTEGRATION IN COMPLEX OPERATIONAL ENVIRONMENTS. AND THIS IS WHERE WE ARE VERY WELL POSITIONED WITH OUR SYSTEM THINKING FROM THE HEARING PROTECTION SYSTEMS TO THE ADVANCED CONTROL UNITS WITH AUDIO DATA AND POWER TO OUR NEW HOPS TO OUR VEHICLE SYSTEMS AND INTERCOM SYSTEMS. WE ARE REALLY ABLE TO PROVIDE very broad and integrated systems. The growing use of drones that we saw, of course, a lot at the Eurosatuary also continues to accelerate the need for better situational awareness and rapid access to relevant information on the battlefield. I think also that what is very clear is that while the drones are now dominating the battlefield, there is a full focus on the fact that they cannot be operated without people. So the foot soldiers, so to speak, are still very, very important. As we see in most European countries, the number of foot soldiers are increasing. And we think that the interaction between rones and soldiers is a trend that we will see even more going forward. And this is also where we can contribute in some parts. So, as said, there is a very strong interest in our new products and solutions, the T30 especially, which addresses larger user groups of soldiers, both in special forces and in the armies, but also for segments in public safety, like police, firefighting and coast guard. And we expect this to be a main contributor to our growth in the coming years. InvisioLink is also creating a lot of interest where we have demonstrated this now to a number of new potential customers that are interested in seeing what we have done with the US Coast Guard, but are also interested in seeing how it can be used in land-based environments. And our NVISIO 8 series, our data hubs, is now fully integrated and up and running in the NVISIO system. We are receiving the first orders. We have quite a few units out for testing in different countries. And the system thinking, again, is a very important part of our offering and something that sets us apart from the competition. So we think that we are in a very good spot. We are the market leading company in our industry as we see it with a lot of good prospects for the coming quarters. We are definitely going into the second half with confidence. are still favorable and there will be structural drivers to support our continued growth for years to come. We think we are very well positioned for continued growth and while there will be volatility as we have seen for the last 15 years, there will be volatility from quarter to quarter but I think we are over time again continuing the path that we have seen with good growth and good profitability and just wanting to repeat that the order delays we have seen in the first half is something we should be able to recover in the second half of the year. So with that I conclude the short presentation of the second quarter and we are now open for questions please.

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 Adrian Elmlund from Nordia. Please go ahead.

Hi Lars and good morning. I have three questions from my side. Firstly, here on the UK framework agreement, did you say £8 billion in potential sales to Invisio, or did I mishear you?

Yes, you misheard me. The total value of the framework order is £8 billion, but that covers quite a lot of communication categories. So even though I would like to say that we can get 8 billion, that is not the scope of it. The total contract, it is in different parts. I have no number on what the value potentially could be for us because it's not specified. It's just from the UK MOD said that the total value of this contract could go up to 8 billion pounds. But it covers many different categories of communication.

Yeah, that makes sense. Fair enough. But could you perhaps give any sort of historical rate on how much sales you could get from this from like previous framework agreements?

I don't know. Not at this point in time. I really don't know because this is a new thing they have done just pre-qualifying. But it makes the What they're doing is they're pre-qualifying several companies and that makes it a lot easier when they then go down to actual procurement and start sending out tenders for different things. Then we know that we are already pre-qualified. We don't have to go through all the paperwork again. Then we can just focus on the technical requirements for the product solutions.

Alright, that makes sense. Thanks. The second question is kind of on the major deviation in the quarter. Obviously, it's North America, right? But if we look at the remainder of the group, could you give us any kind of figure on how the order intake performed versus last year? I'm trying to figure out how well the performance was here if we exclude the kind of US effect here.

Yeah, it is again difficult because it is a snapshot. I mean, we closed the books on the 30th of June, so it is actually a snapshot. On the 1st of July, orders arrived, so had we received those on the 30th of June, the picture would look different. So that's again why I say we have to look at it at several quarters to see the full picture. So there is a number of things that are in the pipeline that is just about timing, where we never know which month or which quarter it will end up.

Okay, good. Last question from my side. I also noted a very strong performance here in Sweden, some sales of 90 million. Could you give us any details on what you have been delivering, and is this anything that we should extrapolate, or is this sort of a one-time effect?

I cannot fortunately not give you any more details for several different reasons. I can only say that we of course are very pleased that we have a very strong performance in Sweden. Sweden now being a member of NATO and investing heavily in its capabilities The next question comes from Iwei Ju from SEB. Please go ahead.

Hi Lars, and thank you for taking my questions. I have three questions also. Firstly, you mentioned this UK MOD name you as a direct supplier. Does it mean that your partnership with your key distributor MCL now terminates?

Yes and no. In certain areas we still have a relationship because of existing contracts But it has always been our ambition, of course, that for as much business as possible, we would like to go direct because we do have 70 or 80 people in the UK. We have our own company. We have all the capabilities now in the UK after acquiring Regal Acoustics and after integrating Regal Acoustics. So it makes sense that we, to some extent, do business directly with the MOD. But in certain areas we will still work with different partners in the UK going forward also. But our main path is to do as much as we can ourselves.

Okay. I recall that you had a large contract a few years back with the UK Army. Can you remind me if that contract was through MCL or it was directly a contract on your product?

Back in those days, it was through MCL. Yes, correct.

So they still have the contract with the UK Army?

On that one, yes and no, I can't go into more details on that. I think this one was back in 2015, the one you referred to. I don't think that one is active at this point in time.

Okay, good, thanks. And second question is on the US, and you also I won three large contracts back in 2019 with the DoD. And if I recall correctly, this contract for five years and with two years extension. I asked the same question last year and I do it again here. And can you confirm if any of these contracts have been expired and if any rate tendering ongoing? And I'm asking because the DoD has this organization change. Would this change impact your contracts?

No, it will not impact existing contracts, but there might be new contracts coming into place over time, as we have also seen in other countries and which is a normal procedure. So as usual, I cannot comment on actual tenders or programs ongoing in specific countries, but I can only say that the U.S. market, of course, is extremely important to us as we traditionally have 30-40% of our revenues coming from the U.S. and we have strong positions. We still have contracts in place in the U.S., yes, and we also expect to get new ones going forward.

Can you confirm the three contracts you won in 2019 are still active?

Yes.

Okay, great, thanks. Last question on the gross margin. You mentioned that the impact was five percentage points from the delivery of the third-party radios. If I remember correctly, the remaining part of the radio order was $30 million after Q2 last year. and the service margin is 7-8%. I'm just curious that the impact is such big here in this quarter. Can you elaborate a bit?

I can only say that the delivery is under such contracts to support a country that really needs it. It's difficult. There have been many, many elements to this contract, including services, support, training, and many other elements. And all of those have had different gross margins and and it has also to some extent been a little unclear up until the last point what should actually be delivered under the last part of the contract. So I don't want to go into more details more than saying that we have now delivered all aspects of this order and there was an impact here at the last part. So yeah, I don't want to give you more details than that. Okay, fair enough.

Thank you. I will jump back to the queue. Thanks, Ray. Thank you.

The next question comes from Daniel Lindqvist from Danske Bank. Please go ahead.

So, hi, guys. Just a few comments from my side. Hi. I guess the US recovery is in focus in this time. And I'm just trying to understand what we have to expect for the second half of this year. So starting off with the US budget year, how important is that to get things going over there? And if there is stress in the system to get the functioning organization from their side as well?

Yeah, I think so. I think the reorganization of the US Department of Defense or Department of War, as someone is calling it, has been a huge task and the purpose has of course been to make it more efficient going forward. But when you do this type of larger reorganization, it takes a little time before everyone finds their place and new people are put in certain areas as responsible for things, also things that impact us. I think that we are well positioned because of the size of our team and the experience we have in the US market. We are working around the clock to try to make sure we understand the new setup and understand where the responsibilities are and who we should talk to. And then, of course, on top of that, you can say that the budgets are not lost, the budgets have not disappeared. The budgets are very large in the US also for our area and will increase also next year. So it's just a matter of trying to help the customers also the end users in the US utilize their budgets and make sure they get as much as possible before the end of the financial year. So we have a very good hopes that we will see good business in the US for the rest of the year. But as usual, timing is crucial and things can easily move a month or two. Now also with, of course, the activities that the US is involved in in the Middle East will require attention from a large part of the army organizations. We are still a very small part of the US defense budget, so we don't think we are that much impacted by that. But it could also be leading to opportunities for us. Again, our US team and we here are very positive about the rest of the year in the US.

Have you continued to produce so the lead times can be shorter in the US again? I mean, could you get an order in Q3 that wouldn't be delivered within the quarter even?

Yeah. We have inventory.

Great. And do you now at this point, I mean, it's hard to tell naturally, but do you think that we could be in a situation where we have a normalized situation in the US in Q4 and going ahead? Or should we expect things to take even longer?

No, I don't think so. Again, I'm used to fluctuations, so I'm not really sure I fully know myself what normal is because it does fluctuate and it has done for a long time. But again, I think we are well positioned for a good business in the US. We are also in the US seeing a lot of interest for our new products. especially also the Invisio T30 headset. So I believe that will drive business for us in 26, but definitely also in 27.

And what can you say about T30? I mean, you started your deliveries now in Q2, is that right? So how has the ramp-up proceeded? Are you already at the capacity to take on large orders? We are producing now every day.

As usual, when we have a new product, it's a little slower in the beginning until everyone is fully trained and up to speed and so on, so it's a little slower. But it gradually improves week for week. And then, as I said, in addition, we are now starting up a second manufacturing site so that we can have a higher capacity. And should we receive larger orders, we have a possibility of adding several shifts or more people. So we are now able to scale this product to significant volumes within a reasonable time period.

Great. The drone awareness, I mean, that's developed in cooperation with your customers or on demand from them. So could there be some potential organizations waiting for that to just hit the market in Q3 and give orders more or less instantly?

Yeah, maybe not in Q3, but it's definitely something that is out for testing and something that has created a lot of interest. But as anything else, it requires a bit of testing before somebody would actually put in at least a larger order. But I think the fact that we have been testing it with I think six or eight customers in different countries and geographies is a testimony to the fact that it actually does provide value and we can be quite sure that anyone testing it will see that this is yet another benefit to this fantastic product.

And then my final question, on the OPEX, the OPEX is sequentially down since Q1 and I wasn't expecting that. Is there anything that we should bring with us? Are there any one-offs in this number or is this a fair

No, I would say that the OPEX development has predominantly been around the hirings and so on.

And that goes a little bit in, that's a volatility in that as well, of course.

So, yeah, again, we should look at it over a longer period of time to get the average trend. But we've been a little slow on the hirings in the first half.

Okay, so what you're saying is basically that you have the one-off costs when hiring for the HR side?

Yeah, we've been a little slower. We haven't added that many people in the first half of the year.

Okay, perfect. That's all from me. Thank you so much.

The next question comes from Jaume Ahlberg from Redeye. Please go ahead.

Thank you. Maybe just one more on the US there. I mean, I guess it's difficult to understand, but you mentioned that the reorganization and that you, I mean, you have a strong position historically, but if it's like, do you have any, do your salespeople have any discussions? Do you have any insight on that this actually things happening right now, or is it still quite uncertain if orders will come in in the next couple of months or quarters?

No, it is. I mean, I don't want to make it sound more complicated than it is because we know how to get by. And one of the things that we are always doing is, of course, also to work directly with customers at the military bases and the unit levels and so on. And that's why it's a huge advantage to have a large sales team so we can, instead of addressing the headquarter functionalities, we can we can also work with the actual units and the different bases and get orders that way. So we will get by and we will see good business in the US going forward. So I'm not so concerned about this. It's just, again, our business has never been fast. Any project with a customer does take time and it is very hard to time it within a certain quarter. So that's just the volatility we have seen for so many years.

Great, understood. And also maybe a quick one on the T30 drone awareness. Is that something you see any competitors have or any competitors trying to catch up after you launch that feature?

I'm sure they will try to see if they can copy or catch up, but it is something that the quality of this feature is also related to all the different components we use in the product and the software and so forth. So if you just take an ordinary Understand.

If you go back, I think you mentioned that the Coast Guard order in U.S. has attracted some interest for other Coast Guard or marine customers. Do you see any progress there? Yes, absolutely.

Customers that are looking at it. We also have received a smaller order from another country as a test order. So there's definitely interest and we will continue to to follow up on this and address this. There's a number of countries, of course, with large coast guards that are relevant for this that our sales team is now addressing.

Great. And the final one, I don't know if you can comment anymore, but you said the order book deliveries are majority scheduled for H2. Can you give any flavor on Q3 versus Q4 as of now? No. That is a quick answer. All right. Perfect. That's all from me. Thank you very much. Thanks, Jarmo.

As a reminder, if you wish to ask a question, please dial pound key 5 on your telephone keypad. The next question comes from Daniel Thorsen from ABG Sundal Collier. Please go ahead.

Yes, hi, thank you very much. I have a question on the gross margin first. So given the launch of T30 here, which I guess have slightly lower initial gross margin and also the underlying gross margin of 58% in Q2, is it reasonable to expect the gross margin to be back above 60% again anytime soon?

I don't know that. Again, our own products when we sell them direct has a very healthy gross margin, but then we are affected by, as I was trying to explain, sometimes we we are asked to deliver other things together with our headsets sometimes we deliver through a partner like Thales or a radio manufacturer or system integrator and then we have a lower gross margin and sometimes we are also selling to the public safety that goes through national resellers so the gross margin is a sort of a mix of everything that happens in a quarter so So the only thing I can say is that when we ship something ourselves directly to a customer, we have a very good gross margin. But the sales model and the route to market is in different directions, and that will affect. And that's also why, again, we don't have an official target for gross margin. We only have an official target for the EBIT margin.

I see. Okay, that's clear. And then another one on the Radio delivery here in the quarter. I didn't really understand if you confirmed that it was around 30 million SEK the delivery in Q2 or was it higher?

We are not confirming that. We are not informing about that in detail. The only thing we say now is everything is done, it's out, it's over.

I understand. And then looking at the order book, it's down around 30% year-over-year. And you mentioned the snapshot picture here at the end of June. But if we were to see some US order recovery here during Q3, will that be able to be shipped within the quarter? You said yes to a previous question here, but will it be enough to kind of save the revenues for the second half of the year? Or should we be a little bit cautious giving the lower year-over-year order book?

Again, I don't know. It will be down to timings. I would say we have significant inventory. We also have a very significant manufacturing capability. So it will all be down to timing. If we receive orders in December, it will be hard to ship them before the end of the year. If they arrive in October, we have a fair chance. So it will be back to timings. But I think at least the pipeline is sufficient to support a good second half of the year. So then, again, back to timings of when we receive the orders.

Yeah, that's clear. And final one on hirings here in second half of the year. Do you have any certain plans on R&D or sales efforts you would like to add to the organization, more or less than usual?

No, not more than usual. I think this is, again, looking at what is happening in the market, activity levels, As an example, is there a lot going on in a certain area where we can see we need a little more sales support? Is there requirements regarding additions to our existing portfolio where we need a few extra hands in R&D? Then we will not be shy. We will hire those people, but there are no... If there are significant attempts to do something more, we'll let you know.

Perfect. That's all. Thank you very much.

Thank you very much.

Thank you all for your questions and interest and participation today. Have a great summer and talk to you again after our Q3, a little later in the year.

Thank you all. Bye for now.