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.