Welcome to this webcast presentation of Etteplan's Q3 results for 2026. My name is Juha Näkki. I am the CEO of Etteplan, and at the end of the presentation, there will be a Q&A session where you will be able to ask questions from myself or our CFO, Helena Kukkonen. As in the previous quarters, we will go through this kind of an agenda. First, highlights and overview of Q3, financial development a little bit more in detail, service areas a bit more in detail, and then we will at the end look at the strategy and financial guidance for the year and of course followed by the Q&A session.
If we look at the highlights of Q3, it was a difficult quarter, but towards the end of the quarter, we saw clear signs of demand picking up and clear signs of recovery were more broad-based than in the previous quarters. We saw different customer segments now starting to improve and also move forward. Also concrete clear orders were received, for example to production-related investment cases. This was encouraging and we are hopeful that this continues. As said, these kind of production-related investments clearly started to move forward. We also received orders at the end of the quarter, which was promising and of course, the strategic development continued. We continued to develop our offering, and we continued to work with new type of AI solutions that will bring more value to our customers. We were able to increase our share of AI-driven revenue to 7%.
Slow growth, but still moving forward. There are lots of cases and proof of concept cases ongoing and we are waiting for some of the larger cases to start, which is pending on customer decisions. But there is a lot of interest, there is a lot of discussions, and we are confident that at some point in time, this will start to move forward. The unfortunate thing during the quarter was that the market uncertainty escalated a little bit and we thought in June at the end of Q2, where we saw clear signs of recovery and better demand, and we managed to even grow a little bit in June. In July, due to the escalation of the crisis in Middle East, we saw our customers go back to a little bit waiting mode to see what will this mean, what will happen.
Unfortunately, in July and August and the beginning of September, the demand situation was relatively slow and only at the end of September we saw an increase in demand again. This led to a situation where our financial results were weaker than we expected, and we needed to, of course, then take measures to adjust to this kind of a weaker demand situation. Also we needed to update our financial guidance during the quarter, which we did in September. This was of course unfortunate and not how we had planned it. We look at the operating environment and countries. Clearly operating environment remains challenging. The uncertainty remains high, and as said the escalation of the crisis in Middle East in July had a clearly negative impact on demand and customers were turning into a more waiting mode again.
Towards the end of the quarter, there was clearly a better situation. We had lots of discussions with our new offering with the customers and clearly some investments started to move forward. Also the production-related, as mentioned earlier, started to move a little bit forward, which is encouraging and shows a certain kind of trust towards the future from our customers. We certainly hope that this will start to materialize in a bigger scale. If we look at the development in demand in different countries, in Europe it was similar in different countries. We saw a better situation in Finland, which is more investment goods driven than perhaps some other countries. Finland clearly was a little bit improving. We also had a good pickup of demand in Poland and in some other areas.
Then in Germany and in Sweden, which for us have a high portion of our services are related to the car industry. Still the car industry remained weak and the investment levels were low. This had an impact on our situation in especially Sweden and Germany. In China, the market remained solid and better than in Europe and this is driven by, of course, the Chinese economy a little bit. More than that, the trend of buying services increasing and this is of course giving better demand for our type of companies overall in China. We'll look at the key three figures. Our revenue was at EUR 78.4, so -4.6%. Operating profit EBITA at EUR 4.8 million, 6.1%. Operating profit EBIT at EUR 3.5 million, so 4.5% and EPS at EUR 0.09 per share. We'll look at a little bit revenue and personnel split.
Revenue by service area. Engineering Solutions was at 58%, Software and Embedded Solutions 22%, and Technical Communication and Data Solutions at 20% for the period. Revenue by country, Finland 43%, Scandinavia 24%, Central Europe 28%, and China 5% of the revenues. Personnel by country 47%, Scandinavia 18%, Central Europe 24% and China 12% of the personnel. China, clearly growing here in terms of revenue and also personnel due to the stronger demand in China. If we look at the revenue by customer segment, clearly showing that still aerospace and defense, especially defense, is very strong and growing. We also saw a good pickup now in the mining sector, where clearly things are starting to move. On the other hand, the metal sector was down, so the aggregate figure of 10%, that is what it is.
The mining sector paid a higher growth, and in the metal sector, there was a decline. Overall, mining is a sector where we see a clear pickup, which is an encouraging sign because this is normally, for us, the first segment that starts to pick up and the others will follow later on. Then on the negative side, we had automotive and this kind of general industrial machinery still dropping and also the forest industry going down out of the large segments that we have. Here still the situation remains weak. However, as said, in the industrial machinery side and in the forest industry side, there start to be some signs of improving demand, which is encouraging. If we look at the financial development, then a little bit more in detail.
On the key figures, unfortunately, due to the weaker summer period, the revenue was declining, and all the major figures were coming down. Revenue from AI-driven service solutions is the one that is going up currently at 7% and growing as a trend during the year. This is a good sign of our strategic progress, however, it is still not leading to revenue growth, which we are of course looking for. Revenue was at EUR 78.4 million for the period, so a drop of 4.6%. Organic was -5.1%, and this is of course disappointing. The major hiccup was in July and in August. September started to recover again, but we were not able to recover the weak July and the weak August.
We also had quite a bit of vacations during the summer, of course, driven by the fact that there was less work, but also people were taking out more holidays, which had an impact on revenue development. If you look at the EBITA, there we were at EUR 4.8 million, or 6.1% of the revenue. For the full year at EUR 13.9 million or 5.4% of the revenue. Clearly our weak H1 is affecting here. Of course, Q3 was behind our expectation, which then led to our profit warning during the year. The non-recurring items were EUR 0.5 million for the quarter, higher than last year. We still have, of course, the need to do certain things regarding our strategy execution. We are continuously looking at ways to improve and transform our operation more to AI-driven models.
Unfortunately, this leads to a situation where we sometimes do need to do certain kinds of restructurings in the organization. But we are moving forward and we do not expect these kinds of numbers to increase dramatically in the coming quarters. EBIT was at EUR 3.5 million, and corresponding to 4.5% of the revenues. Full year, EUR 9.9 million, so we are clearly behind the last year. But we do expect now to improve in Q4. Earnings per share were at EUR 0.09 compared to EUR 0.10 last year, and EUR 0.23 for the year so far after a weaker H1 compared to EUR 0.29 last year. Operating cash flow was also weaker this quarter, so -0.4. This is due to the weaker H1 and especially slower operative performance in Q2, but also due to the fact that we had more vacations in the summer period than we had anticipated.
This had an impact on the operating cash flow. For the full year, we are at EUR 7.4 million compared to EUR 15.2 million last year. Personnel at the end of the period was at 3,626 compared to 3,830. Of course, we have slowed down our recruitment. We have done certain restructurings as well, which has had an impact on the number of personnel. But we are currently changing the mode. We are moving more into recruitment mode in certain areas, especially for the defense sector, et cetera, where there are clear signs of needs. We are also shifting the balance of people between the different segments and this will help us to move forward in this account as well. On the income statement, no major things outside the numbers that were already presented.
On the balance sheet, the total balance sheet standing at EUR 281.4 million at the end of the period. If we go a little bit more in detail into the service areas, the same kind of unfortunate story continues with the service area. In ES, Engineering Solutions, we had a revenue of EUR 45.4 million, an EBITA of 6.4%, which is below last year. Here, clearly, the market situation, especially in the beginning of the quarter, had an impact, and the result was due to those things. At the end of the period, we could clearly see an improving demand. Also, there were certain production-related investments starting, which is encouraging. We did receive orders for certain plant engineering projects and also production projects, production improvement projects. This is encouraging.
When our customers start to invest into their production, it's a clear sign of better times to come, and this is something that we are, of course, looking for and are looking at improving the profitability going forward. Of course, the slightly positive trend in the profitability is visible, and we are expecting to improve profitability towards the end of the year considerably. This is built into the plan. If we look at the EBITA for the full year, it was at 6.1%. During the year, we have incurred one-time items or non-recurring items of EUR 0.6 million. If we exclude that, then the financial performance in terms of EBITA would have been 6.5% for the service area. Not where it should be, but still, in the prevailing market conditions, decent.
Software and Embedded Solutions, a drop of 3.8% in revenues at EUR 17.2 million and an EBITA of 5.8% compared to 3.7% last year. Here, we have done a major restructuring in the business, and we are transforming the business more and more into AI-driven models. This has a clear impact on our business, but with the measures we have taken, we have been able to turn the direction of our profitability. Profitability is improving, and we expect the improvement to continue in the fourth quarter of the year. The market is still challenging, but we also start to see slightly better investment levels on R&D side or from our certain customer segments, which is a positive sign, and we expect now to improve towards the end of the year.
Here also in the period, we had one unit was closed down, which had an impact on the profitability here in the quarter. The non-recurring items for the full year were at EUR 0.9 million, of course, having a significant impact on the profitability. EBITA percent for January, September was 3.7%, but excluding the non-recurring items, which are a result of our transformation, it would have been 6.6%. Going in the right direction, not where it should be, but still going in the right direction. In Technical Communication and Data Solutions, revenue was declining by 7.5% and an EBITA of 7.3% against 8% last year. Slightly weaker in terms of profitability. Of course here as well, we were impacted by a slower July and August and this had an impact on our results.
And of course, here also we have quite a high impact from the car industry in Germany, which has an impact on the overall result. EBITA for January, September was at 5.5%. We have EUR 0.4 million of non-recurring items during the year. Without those, the service area profitability for the full year would have been at 6.2%. Not where it should be, but again, improving. If we then look at the strategy and financial guidance for the year. The strategy, of course, remains intact. We are heavily working with our AI-driven service models and service solutions, and we are bringing AI into pretty much all the work that we are doing inside the company.
We are using our rAIse tools, the AI tools that Etteplan has developed proprietary for us, in most of the offers that we are making for the customers, and we are clearly seeing interest. When these models start to be a bigger part of our revenue, we will see the effect of it, and we will be able to improve our profitability. We have a strong offering once the customers start to take decisions and move forward. We do believe that this will help us to really grow, win market share, and also improve our profitability going forward. But if we look at the targets, we are clearly behind. AI-driven revenue is at 7% increasing, but slower than what we would like. Our Managed Services Index is at 66%, still a little bit stalling at this level. And of course, on the profitability, we are clearly behind.
The rolling 12 months is at EUR 351 million against the EUR 500 million target. So we are very far. In the profitability, we are at 5.4%, which is, of course, disappointing. We need to work hard to improve and go towards our 10% and above target. If we look at the financial guidance, of course, due to the weaker Q3 than anticipated, we needed to downgrade our guidance in September, and we gave a profit warning.
The current financial guidance is intact with that level, and it is for the revenue between EUR 355 million and EUR 365 million, and the operating profit at EUR 16.5 million- EUR 20 million. And of course, this is still a challenging guidance. It does require a significant improvement in terms of revenue and also in terms of profitability, which we are confident that will take place. We see better demand now from the market.
We have won orders, and this is going to lead us to a better performance. At this point, I would welcome any questions from the audience.
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.
Yeah, I could ask from the audience. Roni Peuranheimo from Inderes. If you could give more color on the month-by-month development during Q3. Basically, how big of a change was there in terms of, for example, growth rates from July, August to September? How big of an improvement during the quarter did you see?
Well, we are not disclosing the exact numbers for specific months. But I can say that in July, after the escalation of the Middle East crisis, of course, people were on vacation at that time, mostly in our operating countries. But we did see clearly a waiting mode kicking in, and in July, for this reason, there were more vacations, and people were also pushed a little bit to hold more vacations. And July was highly negative. For example, in Finland, our number of temporarily laid-off people was increasing significantly compared to the end of the quarter in Q2. Unfortunately, the situation remained the same in August. We didn't see any kind of pickup in August, so August was still weak and weaker than last year. Then in September, there was clear movement from our customer side again.
Despite the increase in the oil prices and the interest rates, our customers were still starting to move forward, and September was a clear improvement compared to the previous two months. So it was very clear that at that time, our customers were already starting to move forward with their projects. As mentioned in the presentation, also this kind of production-related investment plant projects, also production equipment projects, were starting at a better pace than we have seen for a very long time, which is encouraging.
Are you able to comment, did you grow in September from last year?
That I cannot comment, unfortunately. But the number of temporarily laid-off people is decreasing, and we are moving forward.
If you compare the demand outlook now at the end of Q3 versus end of Q2, how big of a change, or is the outlook similar, but then the dip happened in July?
I would say it is similar, but it is more broad-based. It is similar. Certain sectors are clearly moving forward. If we look at, for example, the mining sector, there seems to be good demand already right now. This is better than what we saw at the end of Q2. We also see that the sort of pickup and the level of activity is picking up on wider range of sectors than we had in Q2. In that respect, we would say that it is a better situation now than it was at the end of Q3, which gives us the confidence to move forward. The one segment where we still see turbulence is the car industry, and that is, of course, having a major impact for us in Germany and also an impact in Sweden.
Then one question about the AI solution revenue. To which extent is this basically new business, or how much of it is replacing old business?
Well, it is both. I cannot give you the exact percentage, but let's say half-half is a good sort of mark to work with. We are winning new types of business from our existing customers, but also new customers with the new offering. This is the new business part, but we are also converting some of the existing continued services models, for example, that we have into AI-driven models. That plays at least half of the growth potential that we see for these types of services.
All right. Then maybe one more about the guidance. If you could repeat or summarize the major levers for Q4, since at least the upper end of the guidance seems very, very strong.
Yeah. It does require a strong pickup in the market to get to the upper end. That is how it is. It may happen, of course, and we have seen that when things start to move forward, then the pickup can be fast. For that reason, we have kept it fairly high. But also the lower end, we do need to improve. This is very clear. We need to improve on our profitability, and we also need to be able to win more projects so that we can develop the revenues in a positive manner. This requires hard work. It does require a bit of support or continuation of the positive trend that we have seen. But we are confident that we will be able to improve. But then how much within the range? That is still difficult to say.
All right. No further questions from me.
Thank you.
There are no more questions at this time, so I hand the conference back to the speaker.
Okay. Thank you very much. Then, of course, if we look at the situation, of course, we are now seeing on the rolling 12-month basis that this kind of continued weaker market conditions are having an impact, and we are starting to see a bit of a decline in the rolling 12 months. But we are working hard with our strategic initiatives. There is a lot of traction in the market, and now we start to see a better market condition coming up. This gives us the confidence to move forward and continue with our strategies. We are on the right path. We are confident of that. It was extremely unfortunate that the positive movement in the market didn't continue now in Q3, and we were held back with the positive development by at least one quarter.
But still, we are confident that we will be able to improve and return to the growth track in Q4. How much exactly within our range, that still remains open, but with the positive strategic development, with the signs in the market, we will be able to improve. At this point, I will end the conference. If you should have any questions, feel free to contact us at any time, myself or our CFO, Helena Kukkonen, or our SVP for Marketing and Communications, Outi Torniainen. But thank you very much for tuning in.