Good afternoon. Welcome to Modulight's Q2 webinar. My name is Seppo Orsila, and as usual, I'm here with our CFO, Mrs. Guina.
Hello, everybody.
So, I'll again give a short wrap about what we are, what has been done. Anca will cover the financials. Then, I have some good news about the R&D pipeline. Then, we'll recap the outlook that remains unchanged before summarizing. Then, we'll take all your questions as usual. We are a life science company that fights cancer with science and technology. We have ample scientific evidence of that in the most prestigious journals with the leading cancer researchers in the world. We also sell the same laser technology to other high-value applications, including flow cytometry, microscopy, semiconductor, quantum, and defense. Also, in this sector, we have made some progress during the summer. Here are some pictures from the recent therapies, and I guess, the highlight of the month clearly was one of the trials, a phase III trial to be more specific, completing its patient recruitment.
This obviously means that now, we have started a so-called follow-up period, and we'll be following the condition of those patients in the phase III trial. This will last about a year. After that, we can make conclusions. Then, there will be discussions with the FDA based on the results. Overall, the pipeline is progressing on many fronts. We have 36 projects as in the end of last quarter, a little bit more than a year ago, but I think quite importantly, we made progress in several areas. Also, progress in some of the projects outside the life science space. I'm going to talk about those a little bit later. But, I think, for example, it's worth mentioning that one of the largest semiconductor players in the world, we have a couple of them as customers, but they gave us formal approval to be a supplier.
Also, with them, we have worked on a number of different prototypes to a number of different instruments in their portfolio. EBITDA improved significantly, and we continued the positive trend started last year. We increased customer activity during the summer and before and after, we actually continued to have several high-level visits from the customers, which we always felt as a good sign. I think Anca also felt that order collection-wise, things were good during the summertime. Cost savings continue to improve our productivity, but I also want to talk specifically about the platform thing where we have been investing heavily since 2022, and now, we are seeing the results in many ways.
Revenue EUR 1.6 million, slightly down, but I think within our expectation as projects are maturing and there's going to be this kind of, let's say, low phases, but we retain our outlook. We intend to grow also this year. Free cash flow from operations improving slightly as well. But Anca, if you cover the money side a little bit more in detail.
Sure. My pleasure. In Q2, the PPT business continued the triple-digit growth and now, is generating more revenue than we would have used with the previous business model. We revised the pricing structure and updated the agreement with the customers to introduce a higher degree of long-term stability into the contractual structure, which is very important for us as the business assurance that the treatments are approved. By revising pricing, I don't mean that we decrease the prices, but on contrary, we did increase monthly fees and treatment prices, basically. The revenue declined by 18%, partly due to project delays and rescheduling of some of the deliveries, but also due to the growing number of early-stage prototypes we delivered to large customers with mass production price. We consider that this business approach is justified because of the short and long-term potential.
Profitability improved also this quarter, as Seppo already mentioned, and remained positive despite the decrease in the revenues. EBITDA percent was 2.3%, which corresponds to an increase of EBITDA of 185% from Q2 2025. This improvement was given by better margin structure for certain products and increased operational efficiency. Special thanks for this has to go to our technical team, who over the years, developed our labor platform so that it would require a minimum amount of configuration per customer. Also, the diversification of our customer base, along with the progress of growing number of projects, supported the development of the profitability, but at the same time, it increased the cost. Modulight. The product platform is suitable for an increasing number of customers, while the amount of configuration required is decreasing.
Our financial performance evolution, together with the feedback we hear from our customers and the relationships we developed with our customers over the years, prove the versatility of our product platform and the efficiency of our investments and once again confirm our view on the scalability of the business. The operating cash flow in Q2 was EUR 22,000 versus - EUR 478,000 in 2025, and the net cash flow was - EUR 1.3 million versus - EUR 2.2 million in 2025. Please, [Jeit].
Yeah, maybe I'll just, s orry, I will make one additional comment. I think it was an excellent clarification when you talked about the revised pricing and based on some investor relations feedback, we saw that people felt that this revised pricing is reduction, but as Anca said, it means price increases. Or how I would rather put it is that now that the product is more mature, it produces more value, it is more verified, and thus, it is justified to have a higher price tag yet deliver even more value to the customer. This is, I think, something that you see in pharmaceuticals overall, that when something is very uncertain, you use less money, but when things become a little bit more solid, you are obviously happy to pay more.
I think this is exactly same simple phenomenon that we're seeing here and expect to see also in the future. Thanks, Anca, for reminding this fantastic work that our engineers have done. Technical team has worked very hard since early 2022 to improve the platform configurability and applicability and practically speaking, even we don't have a slide on that, we could not possibly deliver all the prototypes, and especially at a much higher quality than we are doing today to many of the leading companies in semiconductor, quantum, and other industries in the world, and obviously, not forgetting the pharmaceutical companies, if we had not managed to do this several years of work to invest into the platform, its configurability and flexibility. So, this is really astonishing achievement and that shows as reduced cost, but also, in the number of units that we're able to ship.
Yes, it's a little bit pity that we on the sales side have not been able to sell to the big companies the prototypes at such a high price as we used to five, 10 years back to startups, but on the other hand, I believe that things are now on a more solid basis. Yeah, thanks, Anca. Please continue.
Yes. For H1, the PPT business grew again, and it was an increase of 137% than in first half of 2025. We see for this first half positive EBITDA of 12%. Despite the decrease of 13% in the revenue, EBITDA percentage improved by 29% from H1 2025. There was also positive development in operating profit, EBIT, and the result for H1 in 2026. The importance of our vertically integrated manufacturing facility continues to increase and together with the versatility of our technology platform, it's strengthening our competitive position in our market. Operating cash flow was EUR 841,000 versus - EUR 1.8 million in 2025. The net cash flow was - EUR 1.8 million versus - EUR 5.1 million. Please, [Jeit]. Here, you see a decrease in revenues and improved profitability for both quarter and half- year periods.
The headcount as full-time equivalent at the end of the period was 62 versus 70 in 2025. The objective of our updated strategy for period 2026- 2027 is strong annual growth and return to strong profitability. In addition, we aim to achieve positive cash flow by the end of the strategic period. We expect still quarterly fluctuations, but our diversified customer base and increased maturity of our projects give us confidence in growth over the strategic period.
Thank you, Anca. Quite a few things about the progress and the business already discussed. As said, the highlight of the month, or the quarter I should say, is clearly the completion of patient recruitment in one phase III project. I must say that in the end, it happened actually a little bit sooner than we were hoping for. This is a good basis to now work on the other projects and then, we'll see what the results will be after a year or so. We continue to support our sites and as said, we've been increasing reward for that and the economics of the PPT are undisputable compared to the earlier business model.
So, the strategy changed by going into heavily on the PPT around 2022, 2023, in my mind, is now starting to show fruit and we have a clear direction and validation of the business model. Our vertically integrated factory, as said, now, already quite a few times, is attracting more customers and being seen as more and more value. The fact that we are also or especially start the company as an indium phosphide fab, more specifically, has particularly this year, increased customer interest. For those of you who don't know, basically, all the telecom lasers are made of indium phosphide, and this is what the company was started on 26 years ago. We have a quite robust technology stack there and we're seeing several interests as the data center boom is exploding the demand for indium phosphide and indium phosphide-based products.
Pilot production is progressing now with increasing number of customers, and they are progressing with their qualifications and ramp-ups. Very recently, we also learned that one very large quantum computing company from the United States has installed one of our prototypes into actually two of their different quantum computers, which are commercially running at the moment. We also were awarded a kind of a supplier status by a major semiconductor manufacturer. Customer base continues strong and while there are some drawbacks to that, like Anca mentioned, overall, we feel good about increasing the number of customers which are very large and especially on the other high value add segments, many of them are literally top leading companies in their own categories in the world. We are obviously honored to be their partners, very often exclusive technology partners. Our outlook remains the same.
As noted, we expect to grow revenue and EBITDA in the financial year of 2026. Anca outlined already the overall outlook and the strategic objectives. In summary, pipeline is increasing or developing, and number of big customers actually is flat compared to last quarter, but on growth year-on-year; p hase III project patient recruitment completed earlier than expected; a pproved as supplier to one of the largest semiconductor companies in the world, semiconductor equipment companies to be more specific; d elivered lasers to a major quantum computer, also now in production units; EBITDA improved and sales reduced slightly; c ustomer activity remains high and even to some degree, kind of accelerating our efforts to improve the company's productivity and cash flow have kicked in as expected; and w e have returned to a slight positive EBITDA, but obviously, far away where we traditionally were and what makes us happy.
But this is a good moment to be in, and I must say that I'm super proud of the technical team and I think that this is really something that will make us a good basis to come back from the holidays and go into the second half. Thank you. Antti, do you want to have some questions? I believe Daniel is not, today, in.
Sounds like we don't have Antti on the line either, or at least, I don't hear any questions. Nor we have open questions on the Q&A panel either.
Maybe we have a problem with Antti's voice.
Okay. I'll take this opportunity then to advertise the Inderes. I think they have a nice website, and they will probably add some Modulight content later there as I believe we have actually a dedicated chat with them as many times before in the past. I'll take Antti's questions there. Now, I have a question on the line. You refer to we also successfully revised the pricing structure and introduced greater long-term predictability into the contractual structure, which is expected to support profitability going forward. What does this mean in practice? I guess Anca touched upon that a little bit, but it basically means, like Anca said, that there are several elements in our pricing, but very simplistically, all those elements were either increased or maintained flat. In fact, I believe that this particular change all were increased.
Why they were increased is that now, we have a more mature thing. I mean, the trials have progressed, our technology is more proven. Thus, I wouldn't talk about price increase, but rather, revision to reflect more the more mature value. So, we're delivering more value to the customer, and thus, the pricing can be a little bit more. There are several components in the pricing. Obviously, our main offering has always been that you just pay for the patients you treat. But over the years, it has become apparent that especially for clinical trials, which can sometimes have delays or no patients treated, et cetera, s ome time ago, we introduced monthly fees, and that obviously, is one side of the predictability so that even if there's no patients being treated, there's still a certain amount of fees to cover the costs.
These are actually not too modest either from our perspective, and they definitely are helping to steady the incoming cash flows and revenue streams. I hope that this kind of clarifies the point. Then, there is a question from the same person asking about the magnitude of the price revisions. They are not huge, but they are double digit in percentage. I don't see further questions on the line. So, thank you everyone for joining and take a look at the Inderes panel over the weekend or Monday and look forward to a nice autumn. Please enjoy the remaining days of the summer and talk to you again in October. Thank you very much.
Thank you. Bye.
Bye.