Profoto Holding AB (publ)

Welcome to the Profoto Q2 2026 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the questions and answers session, participants are able to ask questions by dialing pound key 5 on their telephone keypad. Now, I will hand the conference over to CEO Anders Hedebark and CFO Linus Marmsted. Please go ahead.

Thank you. Welcome everyone. Thank you for listening in to the second quarter presentation of Profoto. Yes, we had a tough quarter. The market conditions were tough and cautious and it resulted in a weak quarter for us, the second quarter. To summarize the quarter, our net sales decreased by 17%, 242 million, and the organic growth, taking the currency effect into consideration, was 14%. We had negative sales development in basically all regions, especially in Europe. EMEA was a weak quarter and we had continuing high uncertainty in the market. This resulted in an EBIT level of zero, so no profit, but also no loss. And the deterioration in the EBIT is only because of the lower sales, even though we had lower costs compared to previous year. And this is based on that we are continuing to obviously having a stronger cost control and resulting in a stable cash flow from operating activities and more of that from Linus later on in the presentation. On the good side, the PRO Panel, we had a good, positive first initial reception in the market, and we see the rental companies that have invested in the product, they are seeing that the product is moving in rental. We are continuing more of launch activities, and I will come back on that. So, talk more about it in more detail on the panel. We are doing as we planned. It is important to us to get into the cinema side of the lighting business, and this is really strengthening our lead offering. And this is part of a four-product line-up that we are offering on the LED side. We have great positive feedback from customers. It is a small niche in the market, but the feedback is great. It is meeting clear market needs and enhancing our product portfolio. So we are slowly gaining traction, even though it had limited financial effect in Q2. We expect the revenue to be better gradually, slowly over the year, the coming two quarters. customers and gaffers we see it that they are demanding the products for their projects from the rental companies but as I said we are very early in the launch cycle and please bear in mind that film projects they do have a long planning cycle so it takes time before the demand materializing in real rentals and in rentals materializing purchases from us into the market. So one of the Customers using the product is Callum Ross, Gaffer Callum Ross, that used it for the film The Butler with Jean Reno. And here are some images from that production and how the light is used in different settings. Also, Desi Cole used it for the TV series Baywatch. If we look into the regions, we had a similar situation in all regions, but where EMEA and Europe was particularly and significantly weak, and where we see a minus 27% change in sales. There are some explanations to this apart from the lower demand in the market. We had some unusually high supply of second-hand products in the market, depending on some rentals selling off their full product range due to financial problems. So EMEA was tough. We also had negative organic growth in Americas. Here we could see a sell-in effect in the second quarter in 2025, which made the comparables very tough. We also had regional variations in APAC where China has a solid performance when Japan and the rest of APAC performance is weaker. So 12% down in America, 27% down in Europe and APAC minus 8% resulting in this minus 17% lower sales for the full group. Thank you. I leave the word to you, Linus.

Okay, thank you, Anders. And as you mentioned, it was a weak quarter with a flat result around zero. And it's mainly due to three key factors. One is, of course, the top line, where we see the organic growth of minus 14%, and also the selling effect from compared to last year. But all in all, top line was on the weak side. But we also had a product mix effect where we had a lower share of high margin product in the studio segment than the automation. So that's more of a temporary effect during the quarter. So it's not a structural issue, but it had a negative impact during the second quarter. And the third effect was more related to the CapEx depreciation effect, as I will come back to in the next slide. But all in all, a weak quarter with an EBIT of around zero. And on the next slide, this is a picture that we have presented before. And as you can see, the total cost base is reduced by close to 20% quarter by quarter. compared to last year. But also, as we communicated in earlier statements, we will see a pickup in the second quarter, and this is exactly what happened. There is a small increase during the quarter, and that's purely related to two things. One is the launch of the probe panel, which includes several fairs and events and so on. So that's one effect, and the other effect is related to the reorganization of our U.S. operation, where we had some personal changes, which increased the costs somewhat. But all in all, very much in line with expectations. So there is no underlying trend with an increased cost base. That's important to state. And here is what I mentioned. Here is what we have seen during the last three, four quarters, where we have a capitalization rate of around 10 million per quarter, but an increased depreciation level on an approximately range of 20 million. So the net effect compared to last year in the same quarter is actually close to 20 million. And that's, of course, quite substantial impact on the EBIT, the underlying EBIT. And this is a level that you can expect going forward. So now it's reflect more on what we are doing and how we see the future level of R&D capitalization. And on the positive note, despite that we have a quite weak top line and then, yeah, flat EBIT, we generate cash during the quarter and we had a positive impact on the operating cash flow of around 8 million. But we also, of course, have an R&D investment of nine. So all in all, it's around flattish. But during the quarter, we managed to amortize our gross debt with 20 million, which is good and absolutely important to have the financial flexibility to support the operation. So if you compare it to the same quarter last year, we have actually managed to reduce our net debt by 50 million. And that's a combination of lower cost base, but also a strong focus on the networking capital. So all in all, we have a strong financial situation despite the tough market. And to summarize, we have mentioned that we have seen uncertainty in the market throughout the world, actually. So it's weak sales in all markets, but especially in EMEA. And the result is affected by primarily weak sales, but also the product mix. And so that's despite actually that we have this close to 20% lower cost base. And as Anders mentioned, the probe panel has been positively received. However, it's very in an early stage, but it's going according to plan and we expect to see a gradual increase the coming quarter. But all in all, it's very much in line with expectation and what we have communicated in previous quarters. And it's important that, of course, we keep the cost control very tight. We don't expect any major changes during the coming quarters. But of course, we look at all the costs all the time. And just the final word regarding the financial position. We are generating cash and we keep our financial position in a fairly strong position. So that's good. And also it's important that we can support our operation as we are entering new markets with new business models, where it's important to really have the flexibility to support the rentals and the new cinema customers. So we have a good dialogue and we are in a strong position to have that discussions going forward. So that's about it in a nutshell.

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Right, and we haven't received any questions by email. So I think that's about for this time. And thank you everybody for listening in and we keep on fighting in the global market. So thank you everybody and have a nice summer. Thank you.