Welcome to the Enea Q1 presentation 2026. During the questions and answers session, participants are able to ask questions by dialing pound key five on their telephone keypad. Now I will hand the conference over to the CEO, Teemu Salmi, and CFO, Ulf Stigberg. Please go ahead.
Thank you, and good morning to everyone, and welcome to this investor call for quarter one 2026 and Enea. This is Teemu Salmi speaking, CEO of Enea. I'm very happy to be with you here today. During the next 20 minutes, excuse me, we'll take you through the result and some comments about quarter one, and at the end, as usual, we leave some time for questions and answers. Let's dive straight into it. First of all, we are very happy and pleased to report that we have a solid 12% net sales growth in the quarter when counting in constant currencies from quarter one last year. That equals 5% growth in reported numbers. A good solid start of the year.
With that, we're also reporting a very strong improvement in our profitability, adding up at an adjusted EBITDA level of SEK 75 million or 34%, which is the highest in many years when it comes to the first quarter. Also EPS jumps up quite significantly since quarter one last year, ending up at 0.98 SEK. On top of that, we also have a very good momentum for our strategy execution at the moment, and I will come back to that in just one second. As said, the growth here in the beginning of the year was quite a lot fueled by our business development, mainly in our firewalls business that had a great successful start of the year, where we signed many deals, many significant deals, predominantly in Europe and North America. That has been fueling our development in the quarter.
We also have a strong momentum in our growth portfolio. You'll see now, I'll come back to that a little bit later on in the presentation, that starting quarter one this year, we will also start reporting our sales a bit differently than last year. I have been getting a lot of questions and feedback about the transparency of our product portfolio and how it is developing. Actually starting this year, we will report our sales development in five product groups instead of the two areas we were reporting last year, networks and security. Now we will have five product groups where we will report our sales against, and I will come back to the structure in just a bit. Hang with us.
Basically, these five product areas, we have one growth part of it and we have one as we call classic part of it, but we've had a very good momentum in our growth portfolio and with our products that are part of that portfolio. Enea, more relevant than ever. We see that the need of secure solution and increased security in general is pushing our business in the right direction. The government sector for us is showing good progress and we have a very healthy pipeline that keeps on growing. There's a lot of opportunities for us to close in that. We are staying strong and growing in the telco sector and also in the CPaaS sector. Now complementing that with the government sector, giving us another leg to stand on when it comes to our future business development. That is good to see.
Also during the first quarter, we have participated in Mobile World Congress, in Barcelona, which is one of the biggest telco or telecom communication fairs in the world. Even though we had the breakout of the war in Iran, which meant that no Middle Eastern customers were able to travel to Barcelona, we still had a very good result out of that, and we are pleased with our participation there. Saying that, the war in the Middle East has also, of course, had an impact on our business slightly. Some deals we were anticipating to close in quarter one has now been postponed into the future due to our customers having other priorities in quarter one. Not losing any business, but we see a slight shift of business into the future.
Momentum is picking up again in Middle East and we're looking forward to catch up on that in the quarters to come. We also made, during the quarter, a press release about one customer of ours, Liberty in Costa Rica, where we had deployed our messaging firewall. In that, in combination with the threat intelligence service that we are providing, we are combating cybercrime. The results for our customer in Costa Rica were really outstanding. In just three weeks, we were able to, together with them, to decrease 99% of the spam and the scam that was going through their network. On top of that, our customer could block over 30,000 scam domains that were used for scam bursts. Not only do we have the good and right products, but they also have a short time to value with our customers once we are deploying them.
On top of that, also in the quarter, not only do we have good traction on the market with our customers, but we're also winning awards when it comes to our products and offerings. We have won five global awards in the quarter, three in the firewall space, one for Traffic Management solution, and one also for our embedded security Qosmos product in the quarter. Then when it comes to the strategy execution, it is moving on according to plan. I'm super happy to announce that we in the quarter also have now recruited our new Chief Commercial Officer, Mattias Johansson. He has started one month ago, and he's now going to take charge of accelerating one of our three pillars in our strategy, which is the market acceleration.
Speaking of the market acceleration, we have also hired new sales capabilities in the security domain to push our security and government business in the right direction. We are continuing to execute on our market acceleration activities as part of the strategy by also together with Business Sweden, being part of one joint event in Taiwan later on in the quarter because that is also one of our focus markets in Asia Pacific. We are continuing to execute on the other activities just as we have commented since we launched the strategy in November. Good start of the year. We are more relevant than ever and our strategy execution is going as planned and also starting to show some good payoffs and payback already now.
All in all, if we look at the numbers for the quarter, our net sales ended up in reported numbers SEK 222 million, which is a 12% growth in fixed currency, 4% in reported currency. Our EBITDA margin 34% or SEK 75 million in absolute numbers. Our net debt has increased slightly and you can also see that our operating cash flow is slightly going down. We see the operating cash flow decrease here in the quarter. There's a short-term part of that where we anticipate that the capital that we're tying up now in quarter one, a big part of that capital we will actually transfer into cash flow already in Q2. There's very short-term spikes in the working capital.
There is, however, the investment we made in Middle East and Africa is tying up a bit of capital that we expect to be starting decreasing over the year of 2026. Earnings per share ended up at 0.98 SEK per share. Our R&D investments, they continue to be on stable levels as we have presented in previous quarters as well, around 24%-25%. Yes, I've already covered most of the things in the slide here. I think the thing that I want to stress is that we had a tough year in our firewall business last year, and our business can be a bit spiky over quarters because we sell the business models we have, we sell quite a lot of perpetual licenses, which means that one quarter can have a lot of sales, other quarters can have a little bit of less of sales.
We have a very strong start of the year for our firewalls, where we actually have signed three major deals in the quarter with one of the largest network operators in the world and also with one of the big CPaaS players globally as well, which we are happy for because it's just showing the relevance and importance of our portfolio. Before I now hand over to Ulf for more details about the financials of the quarter, I want to come back to what I said earlier about how we will now report our sales going away from the networks and security split that we have had in our sales in the previous year. This year we will report our sales in these five product groups as we call it.
If we start from the right, there's an old traditional known segment or product group, Operating Systems which we have said for many years is in structural decline. We will continue to report Operating Systems sales and development separately. The former network and security portfolio we have divided in four product groups: Network Performance and Intelligence, Signaling and Messaging Security, Embedded Network Insights and Security, and Network Access Control. If we start in the top left corner with the Network Performance and Intelligence, basically we have our Traffic Management and our real-time database Stratum there as the main products in that product category. In the Signaling and Messaging Security we have our firewalls. That's our firewall business that will be reported separately in one product group.
We have our embedded network and of course, sorry, with the Signaling and Messaging Security we also of course have our Threat Intelligence service that we are selling included and reported as part of sales in that product group. In the embedded networks and insights and security we have our Qosmos product basically our embedded security business that we are selling. Network access control is the more classical CSP-related products that we are selling like the AAA and the ENUM, DNS, et cetera, in that product category. As you can see there's a color coding behind all these product groups as well. There are the three ones, Network Performance Intelligence, Signaling Messaging, Embedded Network Insights. They are part of what we call the growth portfolio. We have the classic portfolio which is then containing Operating Systems and Network Access Control.
The reason we are doing this is the products in these product groups have a bit of a different dynamic where obviously the growth portfolio is the portfolio that's going to fuel the growth of Enea for the future, where the classic portfolio have the dynamics of focusing on profitability and generating bigger profits than the growth portfolio in the short term. In quarter one, I can say that the net sales split between growth portfolio and classic portfolio is 80/20. 80% of our top line is coming from the growth portfolio and 20% of our top line is coming from the classic portfolio. This is the way you can expect to see Enea reporting our sales moving ahead. With that, I would like to hand over to Ulf Stigberg for more details about the financials in quarter one. Ulf, please.
Thank you, Teemu. A little bit more in detail. We see a 12% growth in net sales in fixed currency. What we're very proud of in this quarter is that we can see also a change in growth over the rolling 12 months measurement, going from last year, 12 months + 1% and adjusted for currency + 4%. We report a 34% adjusted EBITDA margin, amounted to SEK 75 million for the quarter compared to SEK 52.6 million previous year.
This takes us to a level of 34% compared to 25% previous year. Reported EBITDA margin is 23% for the quarter. We have a development of cost that's almost in line with the previous year. The operating expenses spend is about SEK 175.9 million compared to SEK 189.7 million, and the variation can mostly be explained by SEK 13.4 million lower cost in relation to currency adjustments. Going over to the EBIT.
We report an EBIT of 9%, corresponding to SEK 20.2 million, compared to 1% previous year and SEK 1.6 million. This also drills down to earnings per share of 0.98 compared to -0.94 previous year. This is a great development from last year. Going into the reporting structure, we now have presented a net sales split by product group. Also we have the split by revenue category in the bars, you can see three different tones of colors. This corresponds to service, support maintenance, and software license. Over the quarters, you can see that the net sales in each of the groups vary, and the variation depends mostly on software license revenues in the quarter. We have different development and sales efforts, of course, in different portfolios here that create a little bit of different performance in the different groups.
You can see that we have a high share of software license revenue in our growth portfolio to the left. We have also a high share of service revenues in the Signaling and Messaging Security product group, the second group from the left. The two classic product groups to the right, as Teemu mentioned here, represent 20%, show some variations over the quarters and with the development of stable and a little bit of a decline in the Operating Systems product group. Going into the details for the quarter, we can see we had a good development within the Signaling and Messaging Security group, growing by 48% and by 56% if adjusted for the currency. A very good growth within that group, of course. The growth within the Network Performance and Intelligence product group was 6% and 25% if adjusted for currency.
The Embedded Network Insights & Security grew by 5% adjusted for currency and in reported figures even compared to the previous year. The same measurement but over 12 months makes a little bit more sense maybe if you look at the growth. The growth portfolio growing by 4% or 12% in FX-adjusted measurements. The classic portfolio actually had a decline in reported figures by 7% and adjusted for currency by - 5%. One area that we have been working with during the last 12 months is our exposure to financial variations. This shows that we have less exposure in financial net for this quarter. The total financial net for quarter one 2026 was SEK 2.6 million, compared to SEK 21.7 million previous year. Finally, we see the cash flow analysis here with the improved profit on the first line going from SEK 1.6 million to SEK 20 million.
We have improved the financial net from - 21 to - 2.6. We have the items of non-cash and taxes increasing in this quarter, mainly related to a provision that was made in the quarter by SEK 25.7 million. Also we see the change in working capital related to mainly deals that we have closed in the quarter one. The main part of this increase in the quarter will translate to cash within quarter two this year. We have some investments on the SEK 29 million, and we have a result of financing by SEK 4.1 million. This takes us to a net cash flow of total -SEK 10.6 million . We can see the net debt have increased over 12 months.
The main explanation on this change is that we have more exposure to the business in Middle East and Africa region, which have a little bit longer project lead times compared to previous. Finally, we have a healthy levels of equity ratio and net debt to EBITDA. For the buyback program, we have bought 243,000 shares in the quarter for a total consideration of SEK 15.6 million, and all activities are related to the AGM mandate that AGM gave the board a year ago in May. The board have now almost used the SEK 15 million frame that we decided to utilize in that mandate. All right, over to you, Teemu.
Very good, Ulf. Thank you so much. We will start wrapping up this and leave some minutes for questions and answers at the end. Coming back to key takeaways from the quarter, once again, great start of the year with a solid growth of 12% in constant currencies. Great improvement in our profitability and EPS, and we have good momentum for our strategy execution. We feel that we have a good start of the year, and we're also well-positioned for the execution of the rest of the year. That gives us a short-term outlook that we say that our market remains stable to moderately positive. That is exactly what we have said before, and we see that it is in that vicinity still. We are super relevant still for the market, and the government sector is growing well.
I hope and I think, looking at how the development has been in quarter two, that this quarter one will be the last quarter with these heavy headwinds we have had predominantly from the U.S. dollar in 2025. Quarter two should give us a bit of leeway when it comes to the pressure of the FX headwind that we have been experiencing throughout, I would say, the full 2025. That given, for the 2026 guidance, we leave it unchanged. We believe we will have a single-digit organic growth. We will end up north of 30% in adjusted EBITDA margin, and our investments will accelerate the growth. Then also the reason why we're saying that we will also increase our costs a bit in the year is that we're investing in our strategy. That's also why we're saying that our EBITDA margin will be above 30%.
We report 34 right now, which is good, and we have a good buffer down to 30%. We will continue to invest in the year for the strategy execution, which will have a slight impact on our cost as well. Long-term ambition stays as we communicated as part of our strategy launch last year. We have the ambition that we, over the next three years, 2026, 2027, 2028, that we will grow on average 10% over each year in that period. That our profitability will end at the end of 2028 above 35% measured in EBITDA. We leave this also unchanged. Both long-term and short-term guidance remains as before. Very good. With that, I think we are done with our presentation, and we go over to questions and answers.
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.
Right. Just waiting if there is a verbal question coming through. I don't think so. Well, please feel free, as the operator said. Meanwhile, we will jump over also to the written questions here, starting with the first one around a white paper on the utility of a software-in-drone application. The question, are you recognizing revenue today from this end market? How many such projects are you involved in? Good question. We are not recognizing any revenue from these applications yet. We have many ongoing projects, engagement discussions, and actually we are submitting today or tomorrow an RFP with contents of drone applications as well. So it's still a very early market. It's a developing market. We are on the ball. We have relevant solutions for it.
Let's see now, this first RFP that we're submitting might give us, if all goes well, also the first revenues with that application. Next question. Rasmus Redeye, "How should we think about the quarterly variations between the business segments? How should we think of growth in the longer term between growth and classic? And is there anything that sticks out in the business segments, including the CPaaS deal, that drives the solid organic growth in the quarter?" Ulf, do you want to take this?
Right. I think the quarterly variations between the business groups or the product groups are expected and this is a result of more transparency now. Basically, you can say that the four groups have in previous years also compensated a little bit. If a group is low or it doesn't close a large deal in one quarter, one other group will. It's some kind of even out the exposure. What we see in the longer term, of course, we expect the growth product groups, the three groups growing more than the classic. Of course, our long-term strategy targets 10% over three years. That will be north of 10% if we're going to meet that target, of course. If anything sticks out, I'm not sure about that. Do you want to comment on that, Teemu?
No. I think it's been a solid development in the quarter. Of course, in the firewalls business, we had an exceptionally good quarter. We communicated the CPaaS deal, but there are many other deals that builds up the quarter, not only for the firewall business, but for the other segments as well. As you could see Ulf showed, that if we look at the growth segment, it has had a very good development year-over-year. I think it's incremental development of the business that we are doing and also, of course, the relevance of our products and our footprint that is growing on the market. I would say that there's nothing else. It's just organic growth, I would say, that we are working with and developing, so to say. Rasmus, we can talk more later, of course, as well regarding this. Next question regarding AI.
Can you elaborate on what solutions you are developing or selling that specifically protects against AI hacker attacks?" Well, yes. We have several. Let's start with messaging, for instance. In our messaging portfolio, we have been awarded this quarter as well for our AI-based Restricted Image Detection solution. Basically, in messaging, our customers, they handle millions of messages every hour. You cannot parse messages manually, but you need to have a mechanism that scans the messages before you approve and read them through, and it becomes an SMS or MMS or whatnot in your phone when you receive it. Obviously, you need AI solutions there, and we've had those in place. We have many different AI solutions in place already.
One of the latest now released is this AI-based Restricted Image Detection, where it's easy to, in a message, to go through text and find bad language, or you can find words that would make our customers block that message from being sent. Pictures have been harder, of course, to evaluate. Now we have a solution where with the help of AI, for instance, also can look at pictures and determine, is this picture according to the policy that can be sent through, or is it something that has a criminal intent or other malicious intent, so to say? That's one of our latest solutions, and we actually got several awards for that solution in the quarter one this year. We have many AI capabilities already live in many of our product offerings. Next, "Congratulations on nice progress." Thank you, Matthias.
Lots of EU grants for critical infrastructure. Are you aware of any of these?" Ulf, you want to comment on that?
This is an area that we are working into gradually, and definitely we will look into the EU grants and we will effectively take benefit of such grants if available. We cannot share any specifics at this stage.
Thank you, Ulf. I think now, at least what I see the final question here from David, "Q1 2026 effective tax rate was 5.6%. What tax rate should we expect for the longer term of Enea?
Good question. Tax area, we are a business group with many different legal entities, and this is a challenge for us, but we are working on this. I don't have a figure to share as of now, but it varies a little bit between the quarters. We have to come back to that.
All right. It's actually on the hour. I don't see any more questions in the question pane. Thank you for listening. I and Ulf, we wish you a great day ahead. Thank you, and bye-bye.