Good afternoon, everyone, and thank you very much for joining us today for what should be another exciting earnings call. As usual, our CEO, Max, will share with you a detailed update on our strategy, as well as some trends on our business. Before that, Lorenzo, our CFO, will cover the key items of our financial results. First, let me start with a snapshot of our full year numbers. While some of these figures have already been shared with the market back in February, we want to emphasize that this is now the sixth time in a row where we delivered top line and gross margin numbers ahead of our guidance. We will deep dive in more detail in each of these KPIs in a second, but the headline message is clear.
SECO business model delivers strong top-line growth and sector-leading profitability even in what remains a complex environment. This year gone by has been pivotal for our business, and you have seen us active on many fronts, including deepening our technology partnership with some global partners like Qualcomm, Intel, Raspberry Pi, or Axelera. Winning significant new business such as the contract for the U.S. military with Boeing, which Max will discuss in more details later on. Obviously a succession of new offerings both on the hardware and Clea front, making SECO every day more relevant as a key partner in industrial Edge AI solutions. This slide is a one-page summary of today's presentation key highlights, so I won't spend much time covering it.
Just note that the strong performance on both top line and gross margin was echoed further down the P&L with an adjusted EBITDA margin above 20% for the year, and on our balance sheet as well, with the net leverage ratio dropping back below 1x. It's also worth mentioning that the momentum we have enjoyed in 2025 created strong foundations for another year of profitable growth in 2026. While we acknowledge the fact that this is a tough market out there, we have the strategy, the global footprint, and the offering to continue capturing market share and delivering value to our stakeholders. Now let me hand over to Lorenzo, who will go through our full-year numbers in more detail.
Thank you, Clarence, and good afternoon to all. Firstly, I would say that 2025 was a great financial year for the group. We were able to combine growth and profitability together with cash generation and decreasing net working capital. This is a significant combined achievement in a single year. Now, having a look at the key performance indicator of our 2025 financials. Net sales grew close to double-digit at constant FX. Sales was about EUR 201 million, offsetting the important depreciation of US dollar registered in 2025. We had an especially great result in Q4 2025 with a +16% growth rate quarter-on-quarter.
About gross profit margin, we closed the year with a robust 53.6% and 90 basis points increase compared to 2024. The trend was driven by a positive sales mix as well as a good purchasing performance on electronic components. At EBITDA level, we came back in fiscal year 2025 to level of excellence with more than EUR 40 million in absolute terms and above 20% in relative terms. This important result is driven by operating leverage on a lower OpEx base by EUR 3 million, mainly thanks to a reduction in manufacturing cost. Good results in adjusted net income as well at 6.6% of net sales, driven mainly by operating profitability.
Despite the strong increase of earnings before taxes, the group recorded almost stable income taxes, driven also by the use in SECO S.p.A. of Italian tax consolidation tool and by the important activation in 2025 of Patent Box over software developments. Commenting the sales breakdown by area, every key geographic areas grew double-digit year-over-year. The only exception is Germany, featured by a difficult economic and industrial context, which registered a double-digit decrease. However, please consider that Q4 2025 versus Q4 2024 sales in the German-speaking area recorded a growth again, showing some positive sign for our future prospects. Having a look at the end market, most of our key verticals experienced a double-digit growth, in particular industrial and medical.
The exception is vending, impacted by the destocking matter, primarily on the German market. Passing to the adjusted EBITDA performance in fiscal year 2025, we recorded a 20.3% in profitability, about +5 percentage points compared to 2024. The main driver of this result is the operating leverage effect of significant higher sales on a decreasing OpEx base. OpEx, excluding the non-recurring items, decreased about EUR 3 million in fiscal year 2025, driven primarily by the reduction in the use of external manufacturers, privileging in-house production. As per non-recurring adjustment, they are almost all represented by stock option actuarial value. Finally, a word on our net financial position. In fiscal year 2025, the group had almost EUR 9 million of cash generation in a context of significant volume expansion. This result excludes the extraordinary CapEx on the new production sites.
In particular, we were able to further decrease inventory and generate cash flow in a growing business context. Not easy. On financial side, the group reached a leverage ratio below 1x EBITDA, closing our deleverage trend after the Garz & Fricke acquisition in 2021. Thank you very much for your attention. I give the floor back to Max to continue with our presentation.
Many thanks, Lorenzo. Now let me take some time to share some update on our business activity and recent progress. As you know, we are moving through a fast challenging environment, so in a very complex market, but we continue to see strong opportunities, as demand for Edge AI and smart embedded solution is at all-time high and still growing significantly. This obviously support a positive outlook for the next quarter as we remain committed to deliver value to our customer and to strengthen our long-term business partnership and foundation. It's important also to mention that we reach a record level of client interaction during the Embedded World, which is one of the most important exhibition in our sector.
I think this year we received more than 110 customers and generated over 260 qualified leads that we are working on after the exhibition. This number are more than double compared to the previous year. This is a confirmation of the growing interest around our product and our solution. During the Embedded World, we presented AI-powered HMI, brand-new advanced industrial automation solution, and cutting-edge AI demonstration with some of our key partners like Intel, MediaTek, NXP, and Qualcomm. I would say the feedback that we received, both quantity and quality of the feedback, was really amazing, and I think the market is fully recognize our technology leadership. I think this is very positive for the continuation of this year and also beyond.
When we talk about our industries and in this slide, we try to represent to you which are the key vertical end-to-end solutions that we are ready to offer to the market. As you can see, from industrial automation to energy, AGV and defense, we provide our clients with a complete set of Edge AI capability. Customers are asking for scalable solution, high performance, vision systems, and intelligent computing for any new generation of machine and robots. I think our portfolio is covering this request extremely well. In the recent month, specifically, we saw particular interest in the aerospace and defense sectors with a lot of new business opportunity and design wins that will drive a strong growth starting from 2027.
This is such that customers are asking for 10 years or more in terms of contract duration. It's gonna start in 2027, but the duration of this growth will be very long. This comes on top of new vertical that, like robotics, for example, or autonomous systems, drone. All these sort of technology are new, and those represent a new vertical where SECO is entering right now, opening a lot of doors for further increase our capability to accelerate in the future our growth path. I think this is very important, and we are continue to support customers to innovation, especially launching new hardware as well as new Clea functionality to enable them.
We can see our roadmap in this slide, where, as you can see, both on the HMI, on the module, and on the embedded PC, we have a lot of new product that are out right now and will be out very soon. I think we are building them with a lot of silicon partner, and this is driving us additional demand for product and new customers that are coming asking for modular vision, for box PC, high complexity application in industrial, healthcare, and automation. This pipeline give us a solid foundation for future growth, even in a demanding market environment. It also allow customers to transition more smoothly from edge computing to full AI, Edge AI system. I think one of the most recent win illustrated the value of this capability.
In fact, as you know, recently, we announced a significant win with Boeing for a Deck Control Device that operates in the U.S. Navy environment. This project, in cooperation with Boeing, confirms our ability to deliver high-end solutions in extremely challenging environments. The device meets stringent requirements, operates under harsh environments, and offers a simple and safe user interface for remote control. I think this win is very important because it demonstrates our hardware and software capabilities, and how we can combine together a very strong mission-critical product. I think talking about this deal, for example, is a deal where we receive a contract for over 25 years of production, so you can imagine how long the product life cycle is in the defense and aerospace market.
I think now is the time to talk also more about the software, because the software is becoming more relevant, and this is driven by the AI. As you know, AI is transforming basically the industrial sector, and any customer is asking or will ask solution to deliver and deploy AI directly on the device. And this is where our software platform, Clea, is becoming from a nice-to-have, which was until now, into a must-have, because with Clea, customers can train models, deploy them, and run them directly on the field device. This complete integration reduce the time to market of the customers in creating a lot of value for them.
To deploy a model on a device with just three clicks, we have introduced, and we presented it actually during the Embedded World, a very innovative solution, which is Clea AI Studio. Just to show to you how it works, this is a no-coding experience where you need to bring, basically, the model from our Application Hub, which is an app store, take them and use them into the Studio AI. It enables basically any person, also without any specific technical technology background, to deploy the algorithm to see the workload working. This is easy, this is fast, and this is simple, and this makes it really available to everyone.
This is transforming ideas into practical AI-driven services that run on the device at the edge or in the cloud based on the customer's choice. It is a key part of our strategy to continue to grow our software business. Thanks to Clea AI Studio, we can now simplify AI deployment, accelerate customer time to market, reducing their initial investments. I think these three pillars are what will drive Clea adoption further. With our ecosystem, customers can now deploy optimized AI models in a minute across any kind of architecture. We provide a comprehensive toolkit, including advanced software containers, simple apps, and detailed deployment guides. This reduces significantly the pre-work and accelerates experimentation in computer vision and deep learning models.
The second Application Hub is a central element of our strategy because thanks to it, we are creating an ecosystem of third party that together with SECO will offer to the customers a very end-to-end solution with a lot of use cases and a lot of verticalization software-made application. Now let me shift from products to operation because it's important also to have a look how we are strengthening our industrial infrastructure. We are very close to complete our building in Arezzo. This is 10 assembly line and production line with the implementation of a massive operations center. We are enhancing traceability, efficiency and quality. This facility is also designed to meet key certification standard across defense, transportation and medical, and other regulated industries.
I think thanks to these investments, we will support internally up to 50% of further growth in our revenue, and it will together with the investments that we did in Hamburg with a new anechoic chamber, as well as in Hangzhou in China, where we expanded significantly our production also over there, is representing a very solid industrial infrastructure to support our future growth potential. Now, as you know, we are in a world very challenged. A lot of things are happening. Specifically in our sector, we are facing something on the memory that it never happened before. In fact, driven by big demand for data centers for AI applications, price of the memory are really booming in the last six months.
Anyway, we was able to face this as such a problem with a very good and strong planification. As well as, thanks to our capability to basically negotiate with customers, we was able also to secure a good compromise for the margin, to protect our margin during the course of 2026 and 2027. Second, we are acquiring a lot of memories. We are now covering almost 92%-93% of the entire demand in 2026. We are already covering half of the demand also in the 2027 because we really think that this market could be a market that affected by allocation soon. We are securing our supply chain and the supply chain of our customers. I think this is another point where we are creating value for the customers.
I think it's important also to mention that thanks to our job we will protect our gross profit margin along the entire year. I want also to anticipate that the Q1 as well as the Q4 2025 will be slightly affected by this impactor. But I think progressively it will recover significantly well and we will see it improving already the Q2 and the H2 of the 2026. I'm really happy to see that we started the year very well. In fact, we record an incoming backlog very strong in February.
It was basically a record, all-time record in our history, over EUR 30 million in orders in a single month. This continues also in March, so the trend looks solid. This reflects an increasing customers' activity and provides a better visibility for the coming quarter, confirming that the demand for our edge solution is accelerating. We remain mindful of market uncertainty, yes, but the order momentum is definitely a positive sign for our top line performance. With this trend in mind, let me share our outlook for the Q1 of 2026. We think we can stay close to EUR 50 million in the Q1 of 2026. I think this guidance reflects both optimism and caution.
I think it's important also to have in mind that together with these good results, we see strong customer interest for all the new product. Our pipeline is very high, so a lot of opportunity in a lot of different vertical. Also the KPI that we are monitoring are showing definitely a very good momentum. I hope this presentation has addressed all the key point, and I want to thank you all for the attention and now we can open the Q&A section. Thank you very much to all.
Thank you to the speakers today. We now have an opportunity for questions. As a reminder, if you would like to ask a question, please use the Raise Hand function on your screen, or for those dialing in, it's star nine on your keypad. Once your name is announced, please unmute your line. State your company name before asking your question. Thank you. The first question today comes from Marco Vitale. Please, Marco, go ahead.
Good afternoon. Thank you for taking my questions. Marco from Mediobanca. Two questions from my side. The first one is clarification on the outlook. We noted that a progressive acceleration in organic growth throughout 2025. And you also mentioned a very strong pipeline and backlog as of February. When we're looking at the outlook for the Q1 , we are guiding for mid-single-digit revenue growth. That implies a sort of deceleration compared to the pace that you recorded in the second part of 2025. The question is whether this quarterly trend is affected by some specific factors?
What should be the pace for the following quarters if you see an acceleration or basically you say want to adopt a more cautious view on your growth outlook, also mindful of the fact that consensus is currently projecting a 15% growth for 2026? The second question is on profitability. We noted that in Q4 there's been say a couple of items in terms of OpEx and gross profit margin that say translated to a lower profitability compared to Q3 and previously you were mentioning also some noise due to say gross profit margin for what concern the cost of memory and so on and so forth.
The question is whether you see room for improving margins in 2026 in a context of growing volumes? Last question on working capital and broader on cash generation that was very strong and better than expected. What have been the drivers for such, say, efficiency in terms of, especially inventories? Do you expect these, say, working capital, say, incidents to be sustainable also for the coming quarters, or do you expect some volatility due to also the supply chain issues? Thank you.
Thank you, Marco. Let's start from the first question about the revenue growth. I think looking back in 2025, we posted in the Q1 a quarter-on-quarter growth proximate to zero last year, the Q1 , to arrive finally on a 16% growth in Q4 2025. I think this year the trend will be similar. Luckily, we are starting with, as you said, something in between 5%-6% of growth already in quarter-on-quarter on Q1. Based on the orders and on the pipeline, we see it progressively growing during the rest of the year. We'll have we are expecting to have a very good year in terms of growth. That's the first question.
Second question is regarding profitability. I think in Q4, we discounted already a decrease on gross profit margin driven by memory. Memory costs are increasingly. We do not have a magic wizard, so we cannot simultaneously increase the price to the customers. We did it, but with a couple of quarters of delay. We will see the impact on the margin continue as I anticipated in Q1, but will be fully neutralized starting from Q2, Q2 of this year. On the free cash flow, yes, it was really good, I think driven by two factors.
One is decrease in inventories, and second is, we did a very good job on receivable, and that was basically a working capital optimization, which is structural in our business, in our business model in a normal environment. I would expect to see some impact about it from the inventory. Not actually too much because we are well-balancing the extra inventories that we are doing on memory, covered by prepayment from customers. It will affect our free cashflow, but not too much.
Okay. Thank you very much.
Thank you.
Thank you, Marco, for your question. The next question today comes from Bharath Nagaraj. Please, the floor to you.
Thank you. I have a couple of questions. On the new Arezzo facility coming online in Q2, I think, can you help us quantify the expected cost benefits that you could potentially see during the course of the year? Should we think about that at a gross profit level or further down? Then secondly, on Clea, 2026 was the year where several customers who were on trial previously were expected to go into mass production. Is that still on track? And what level of growth in Clea should we be considering in 2026, and how much will be recurring? Thank you.
Okay, about the new factory, we will see a clear benefit in terms of cost, not actually on the gross profit margin, but below the gross profit margin at the OpEx level. We introduce in this factory a lot of robotization and automatization, so meaning that we can make more product with less personnel. This is in the end of the story. Therefore, you will see in the H2 benefits in terms of incidents on the OpEx side. About Clea, I can confirm it. I can confirm that we are closer to sign a significant, a very significant multi-year agreement with large customers. It will drive a lot of recurrent revenue.
A part of it, we have several customers where we are closing discussion, entering into the production phase. We will see it progressively during the year, and I will be more precise, of course, in at the mid of the year while we will guide the market with an official guidance as always. Generally speaking, what I can tell you now is the adoption of Clea is going well. Discussions with customers are increasing based, as I told you before, especially on the AI effect. Many customers are really interested now in deploying AI at the edge using this new technology to bring something new on their customer table. Therefore, we are facing a lot of inquiry and a lot of customers interaction about these topics.
It happened also during the Embedded World where we collect a lot of demand around the Clea framework in general and Clea AI Studio specifically. I think definitely during 2026 we will see this business growing for sure at a different and much higher growth rate compared with the edge computing one.
Thank you. That's very, very helpful. Just if I may do a quick follow-up. In terms of the new capacity that's coming online in Q2, how should we think about the utilization of that for this year? Is it gonna be slightly at the lower end compared to where you normally are at? Or do you think that you have enough demand and visibility for this year to be at a, like, 70%-80% that you normally are? Thank you.
I think this new production capacity has been done not to cover the needs of 2026, but to cover the needs of the company at least by 2028-2029. Therefore, we will be able to have a production capacity utilization in the range of 60%-65%, so well below our average, which is now in the range of 80%-85%, giving us a lot of room of improvements in terms of velocity and capability to capture the demand that, as I said before, still strong. Therefore, we did a good investment in my mind because we clearly anticipate well a strong trend that is coming this year, and make ourselves ready in advance was a very good move in my mind.
Thank you very much for your question.
Thank you.
Thank you, Bharath, for your question. Currently, we do not have any question queued, so we will wait just a few moments to give everyone the opportunity to ask a question. The next question comes from Aleksandra Arsova. Please, the floor is to you.
Hi, can you hear me?
Yes.
Okay, great. Thank you for the presentation. Just a couple of follow-up questions. The first one is maybe on generally on the sentiment. You mentioned before that the very good order intake you had in February is also continuing into March. I assume despite all the macro and geopolitical situation that is ongoing. What do you think is the reason behind this very strong order intake also in March? Your clients believe that this macro and geopolitical situation is only temporary, or maybe just a little bit of color of why do you see still this very strong sentiment on your clients' end? The second one, again you mentioned order intake thirty...
More than EUR 30 million in February, but just can you give an idea of the total backlog at the end of February or maybe March, so just to track the evolution over time over the coming quarters? Thank you.
Well, let me cover the last one first, and maybe we can go on this slide. Clarence, thank you very much. We are not communicating the total backlog, but just to give you the sense also the book-to-bill. I think the book-to-bill is very well above one, let me say, record high over the last three years. I think that could give you a clear indication about the trend. Returning back to your first question, I think what is happening is geopolitical tensions are in some way opening a very good window for SECO, which is a Western-based company. It's important for a lot of customers here in Europe as well as in the U.S.
As you know, our main competition is based in Asia. Due to the tension, the geopolitical crisis around the world, I think many customers are considering more and more important to be a West-based, you know, partner instead of a Taiwanese or a Chinese one. That is giving us fuel definitely with customers that we was not able to serve before, so new customer. As well as the demand is still strong from the existing customer because we are now facing a technology transition in between, let me say, the old embedded technology and the new Edge AI solution, meaning that a lot of customer really need to have additional computational power at the edge, meaning into their device.
Therefore, they need to order new devices instead to stay with the older one that cannot support this such of elaboration of models directly on the device. I think so the combination of those two driver is really making the market good for SECO, even if I cannot avoid to mention that this such of crisis into Mideast as well as Europe Ukraine war is really something that is make our life challenge together with the memory. It's a tough year, but we are navigating into it extremely well. Customers continue to push for new product and for having a new solution, which is good for our business, and let's continue it. Thank you very much.
Thank you.
Thank you, Aleksandra. Currently, we don't have any questions queued, so we will wait just a few moments to give everyone the opportunity to ask a question. As there are no questions queued, I will now hand back to the speakers for any final comments before bringing this presentation to a close. Please, go ahead.
Thank you very much to all for the attention. We will be around at the STAR Conference, as well as with a European road show in the next couple of weeks together with Clarence. Speak soon. See you soon. Bye-bye.
Thank you everyone for joining today. This presentation will now come to a close.