Again, myself Seppo, Founder and CEO, and with me our CFO.
Hello. Anca Guina.
Yeah.
As usual.
As usual, we'll recap what the Modulight is. We'll give you the highlights of the quarter. Anca will talk more details about the numbers, and then we'll shed some more light into the progress we've made with the R&D pipeline and give a recap on the updated strategy, which was announced in the previous webinar. As some of you may have noticed, we also issued an outlook earlier this week.
We'll cover that before summarizing and going to your questions. Here again, it has been a rather busy month on the hospital side, and we had many treatments across the United States. From left to right, bladder cancer treatment in Hollywood, ophthalmic therapy in New York State, and on the right, we have a pancreatic cancer patient from California. As said, we fight cancer with science and technology.
We are manufacturing the lasers here in Tampere, and then we are selling the lasers to other high value-add applications such as flow cytometry, microscopy, semiconductors, quantum, and defense. As we noted in our release, there was particularly nice activity in semiconductors during the past quarter. In short, about the Q1, EBITDA improved significantly, continuing our trend of, I would say, one and a half years or so, despite the fact that sales declined 7% year-over-year.
In the pipeline, we saw a major increase, and this is in my mind a result of the steadily increasing customer activity that we have been seeing since last summer. What was particularly nice about this customer activity is that all the new projects came from very large companies. Very large meaning over $100 billion market capitalization in the respective markets where they're listed, which is basically Nasdaq.
Customer feedback was accompanied by ample amount of positive feedback. We also made progress on the contractual side, particularly with PPT. As said in other high value-add applications, progress on multiple applications. I would like to mention especially the semiconductors, where we are extremely pleased about the new activity that has started. Anca will cover the cost savings and finance.
We're obviously not satisfied with the $1.5 million revenue versus the $1.6 million a year ago, but there were some rather mundane delays, which kind of shifted a little bit the deliveries this quarter. I think overall, the kind of mixed sample plethora of deliveries was something that we are extremely pleased with. I'm going to discuss the rationale for the revenue side a little bit also in the context on when we are going to recap the outlook.
EBIT EUR 330,000, I believe that's about 22% on sales, continues to show our kind of activity in improving the productivity and also that earlier quoted comments about the margin health and maybe even improving. Free cash flow now low single-digit % of our total cash base. Good there as well and significant progress. Mrs. Guina, if you want to walk through the numbers.
Yes. Thank you. PPT business continued to grow by more than 100% if we compare to same period last year. As we already announced in the previous webinar, the PPT revenue in 2025 exceeded EUR 1 million and also showed strong growth during this quarter. However, I would like to emphasize that we will still see fluctuations quarter-over-quarter, despite the fact that we have 80 sites using our devices.
The reason for this, there are basically two reasons for this. One is the quite small business scale for PPT, and the other one is that once a clinical project is ending, there is a break of few quarters in treatments before the approvals are ready.
Yes, we will most likely have these fluctuations in the future as well. As you can see, the revenue declined by 7% from Q1 2025, and as Seppo touched a little bit, one of the reasons was that we had some delays with the projects, and another one is that there have been some postponed deliveries. The profitability improved also this quarter, despite a decrease in the revenues.
We had EBITDA of 22%, which corresponds to an increase of 57% from the same period, 2025. Operating profit increased by 33% from corresponding period, and it amounted to EUR -1.1 million. All these developments have been possible due to our healthy cost structure and continuous improvement of operational efficiency, which we basically comment. It's a continuous activity which we basically report to you every quarter.
Our product platform is now suitable for an increasing number of customers, while the number of different configurations is decreasing. This is also contributing to our increased profitability. The development of the business in the past quarters proves clearly the versatility of our product platform, the efficiency of our investments, and also confirms our view on the scalability of the business.
Also, in terms of cash flow, we improved. Operating cash flow was EUR 818,000 in this quarter, compared to minus EUR 1.3 million a year ago. The net cash flow was minus EUR 474,000 versus minus EUR 2.9 million a year ago. Yes. Here you can see improvements in profitability in all the figures, as well as cash flow. Headcount at the end of the period, 62 versus 66 a year ago.
Thank you, Anca. Let's dive a little bit deeper into the pipeline. Currently, 36 active projects versus 31 a year ago or 33 at the previous quarter. All the growth coming from very large companies, which is something that, combined with the maturity of the projects in the pipeline, is one of the key reasons why we are kind of thinking that we have a little bit better visibility than in the past.
The economics are improving, and customer commitments are increasing. There are a number of small details that have improved the structure, as well as the number of committed customers at the pay-per-treatment model. The number of sites is already above 80, as reported earlier, and continues to grow.
The vertically integrated story that we have been pushing for 10 plus years is clearly attracting more and more positive feedback from both the existing customers, but also very much from the new customers we have acquired. One thing that has been quite remarkable change, and we cannot fully explain, is that nowadays, even very big customers are willing to start several projects at the time, whereas in the past, they would kind of work with you on one project for some years and then based on that feedback, consider additional ones.
There is a very clear indication on these largest companies now willing to kind of ramp up the activity in parallel mode.
Pilot production is progressing with several customers, as noted, and there are good indications coming, and we have to obviously keep in mind that the business is still rather small, and we should prepare for fluctuations. On the other hand, I would say that for a long time, this has been really a spring of more or less all only good news so far. The very large companies now account for 44% of the pipeline customers and projects.
This is a clear step up from earlier 35%, and this is obviously what we have been seeking to do for a long time, that increase the number of more stable, more predictable business cases from large U.S. corporations. This is something that is one of the key things for which I'm proud of the team's achievement during the beginning of this year.
Obviously, it is based on a long-term work, hard work, but probably also a fair amount of luck. I cannot say that this is only due to us, because many of the fundamentals, what we do, how we do, have been essentially same for several years, if not even decades. Certainly, have developed and improved, but I must only account that the geopolitics and rearrangement of supply chains in the world have definitely started to play a positive impact in our favor.
Just to recap, the strategy that we updated remains essentially the same as in the previous strategy period. We just concluded that we need a little bit more time, and then we can focus further as many of the things were improved during the previous three-year strategy period. We are now more focused on developing the existing pipeline than ever.
The pipeline continues to grow, but this is also because of the synergies that Anca mentioned. Obviously, we will not say no to new customers or new projects from the existing customers. There is an ample and increasing need in different cancers, and we're extremely happy to see our customers expanding the portfolio and indications where they apply our product. As said, we are very much into scaling the PPT at this strategy period. Meanwhile, operations ramp-up is a core focus for the company as we are preparing for volume increases.
For this, we have the five programs as the last strategy round. Now more focused on sales excellence, cloud business technology, PPT site recruitment and usage, meaning usage per site, and then productizing platforms and ramping up the mass production.
Our financial targets are listed below but are obviously continuing the strong revenue growth and are returning to high EBITDA profitability as well as positive cash flow. As said this Tuesday, the board decided to issue the company's first-ever outlook, and we want to be careful with this. The outlook is that we expect to grow revenue and EBITDA this year. We are introducing the guidance to meet the investors' request for increasing transparency and additional information for better predicting.
The guidance reflects the management's current expectations about financial performance and about the future. We will obviously revise the guidance should this change at any time. To summarize, EBITDA continued to improve nicely despite a small decline in sales. Overall, our outlook for the year remains strong on both metrics.
Pipeline is increasing, and we are particularly pleased about the maturity and size of the customers added to the pipeline. Customer activity, which we started seeing a very strong increase since last summer, is now converging to orders and hands-on collaboration. We continue to drive for productivity and cost savings, but our main focus now is ramping up the production and increasing the number of sites in the PPT. This is all for today. Very happy to take any questions that you might have. Daniel, do you want to go first?
Yeah. Thank you, Seppo. Thank you, Anca, for the presentation. It's Daniel Lepistö for Danske Bank. I have a couple of questions maybe starting off with this. You referred to this increased customer activity, and obviously, these have translated to orders as well. Can you discuss a little bit about these segments? You discussed the semiconductors, which is something that you have seen nice traction in.
Can you sort of remind, have you seen anything in quantum, which you sort of noted as well, basically after this order that you received around a year ago? Then finally, on this defense side, which is a little bit of newer sort of a segment, I guess. At least something that you haven't talked too much previously. Can you touch upon these two segments a little bit? What are you seeing there? What's the traction in these areas? Thank you.
Yeah. Great question, Daniel. In the semiconductors, we have a couple of very large customers who are leaders in their own domain. In the quantum, we more or less have the same number of these very large players, but obviously quantifying them is a little bit more difficult as you know, nobody's in production with quantum yet. The fact that we chose not to comment this too much is not because there wouldn't be any activity.
I just chose to focus on the semiconductors as they are real world stuff that is in production and is something that customers have a very demonstrated track record of what they're doing now and what they want to do this year and next year, and so forth. Yes, we're working with a small number, which is not one, but what I would classify as global leaders in quantum.
If you Google the top five players of the quantum computers in the world, those companies will most certainly appear on that list. Regarding defense, Modulight has had a small defense business for ages. The activity on that side is still to be concretized. There are, I would say, multiple discussions ongoing about significantly bigger projects. Those are not considered in the pipeline at the moment because they don't yet meet the certain criteria for probability, business scale, et cetera.
The discussions on that front started to pick up last year and difficult to say when or if we ever have interesting things to announce within that domain. We'll certainly do so within the, let's say, regulation and considering the sensitivity of that industry. At this time, we have interesting discussions but nothing material to announce at this time.
All right.
Did I answer your question?
Yeah. Very comprehensive answer. Thank you. The second one on this pay-per-treatment revenues. You keep referring to this potential pause with these clinical trials causing some variation with how the revenues are coming in. Can you clarify a bit, how important are these projects to your PPT revenue base? And then the second one, obviously is, when is this type of a pause expected? Is this something to anticipate for the coming quarters, or is this like a warning that this might happen at some point over time?
We have been saying for quite some time that several clinical trials are coming to an end. Technically, after a clinical trial ends, the patient recruitment stops totally. We have had, however, experience where, for example, for compassionate use or special cases desired by the doctors, which is at the sole discretion of them, they still continue the treatments, even if the clinical trial is closed and there is no final approval yet from the FDA, which will obviously take some quarters after the clinical trial ends.
There is basically a zero-treatment period for that particular tranche of patients. As said, there may be exceptions. We have seen those in the past. The number of new indications, i.e., new trials, is also simultaneously starting. It will be difficult to know whether that will be seen on the total level.
Maybe the total will stay flat, maybe it will decrease or maybe even increase, but definitely the dynamics are that you should expect for the particular cohort of patients two, three quarters or so. Regarding the timing for this, we said earlier this year that certain trials have progressed faster than anticipated. The goal was to complete those at the end of this year, but now certain trials are already pretty close.
It's difficult to always say about these patient recruitments, but we kind of hope that the trials are completed as early as possible. Particularly for that trial, this means by default, no patients. I cannot speculate too much on that. I can only explain to you what the history has been .
In history, there has been patients, but if you go by the, let's say, simple objectives of the trial, you shouldn't have any patients after the trial is complete.
Okay. I think I got it. The final question. In the slides, I guess you discussed some process with this pilot production. You are seeing that these pilots are becoming maybe mass production. Sorry, I saw the slide very quickly, but if you catch what I mean here. Basically, you discuss that you would see some indications of upcoming mass production. Can you discuss this a bit, what this means? I don't think you-
Yeah
...went through it.
Thanks. As said, we've seen a lot of increase in customer activity since last summer, and this is many different types of things. Customers have been much more active about doing formal audits to our production facility. They have been more adamant about agreeing on, let's say, operational things, what you would do in a production environment with considerably higher volumes, doing all kinds of forward-looking discussions about future pricing and several of these types of things.
Agreeing on, for example, servicing possible faulty products, et cetera. To me, these are all, based on my experience, indications of increased signs of products becoming more mature. Whereas, for example, two, three years ago, it was considerably more, let's say, R&D and engineering-only-oriented activity. Yes, these are not definitive guarantees about change, but we have definitely seen many new types of things happening with multiple projects.
This, in our view, is a positive sign.
All right. This is something that maybe also motivates your little bit of better visibility that you also referred to.
Yes, exactly. If that was not clear, this combined with the progress with the PPT are, in my mind, some of the key things why we dare to issue an outlook.
All right. That is clear. That's all from me. Thank you.
Thank you. Maybe as usual, we'll go with the other analyst. Antti, are you on the line?
Yes. Good day. Can you hear me?
Yes.
Great. Thanks for taking my questions. I'm Antti Siltanen from Inderes. Maybe first I wanted to continue from Daniel's question, so about the PPT and then possibly breaks in patient recruitment. After the patient recruitment stops, there's typically a follow-up period and then possibly a submission to FDA for regulatory approval. Do you have any project at this point in FDA process or under revision for approval?
Obviously, as we have projects with customers ranging from preclinical to phase III as well as in-market products, there is always something in review with the FDA. You are probably now mostly kind of meaning the kind of submitted phase III results or the follow-up period results. Those would be something that are best communicated by our customers. There are multiple activities ongoing. When I discussed with Daniel about increased customer activity, I failed to mention the regulatory side activity, but that has also been very much increasing.
Okay. Maybe second question on the pipeline. I wonder if you can comment a little bit on your projects and how the split is between medical and life sciences versus other technology areas. Can you talk a little bit about the balance between life sciences and other tech?
Traditionally, it has been kind of varying from 50/50 to 1/3-2/3 life science. I don't have the number off the top of my head, but I would say that now we are probably, during this quarter, we increased a little bit more on the other high value-add applications. Thus, the life science is definitely in a majority at the moment. There is, I would say, a healthy portfolio of other projects as well at the moment.
Okay, thanks. Maybe final question on operating expenses. Those were, at least in Q1, kind of clearly on a lower level compared to last year. Is this kind of a regular level that you would expect during 2026?
I believe this goes to you, Mrs. Guina.
Yes. As we are almost every quarter mention, yes, we will continue to improve our efficiency, and this is one of the results.
Okay, thank you. That's all from me.
Okay. Yeah. We also have in the Q&A system a question from the other audience. How big a percentage of your revenue comes from PPT? Please remind us of what is your target in that respect. This is a great question, and I'm sorry to say, but we don't have a published target for the PPT other than increase the number of sites and revenue per site.
As communicated earlier, company is not providing revenue splits for its revenue due to the still relatively small size of the business. Thus, we have no split other than that at the end of FY 2025, we reported that PPT revenue exceeded EUR 1 million for FY 2025. Now, I believe we said that Q1 revenue was about 40% of the entire last year revenue and growing at a triple digit rate compared to the last year.
This is the amount of detail that we have reported. We'll probably start more systematic reporting on this when we are little bit more mature with this. We're definitely happy with the progress. Despite all that we said about heeding the warnings on the clinical trials, we, as said, use this as one of the key reasons why we decided that we are comfortable enough to issue an outlook on the revenue and EBITDA growth this year.
I don't see any other questions on the line. We thank everybody for attendance and look forward to talking to you again latest after the summer and wish everybody a great weekend. [Foreign language ]
Bye.