Welcome to the conference call. For the first part of the conference call, the participants will be in listen-only mode. 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 speakers. Please go ahead.
Thank you, and welcome to our presentation of the first quarter of 2026, which we characterize as our best first quarter so far. As some of you will know, our first quarter is sometimes a little bit soft beginning of the year and so has been the case also this year. I still think we have done pretty well, with good growth in both revenue and order intake, despite the prolonged U.S. government shutdown that we have seen during this quarter. We've seen good order intake across most of our key markets and we will get back to, of course, some of the details here.
Our gross margin was a little affected in the quarter, related some to some donation-tied sales at a lower margin, and that also directly impacts our EBIT margin. When we leave the quarter, we are sitting with a strong order book that underpins our revenue for coming quarters. Now, again, the first quarter was our strongest first quarter ever. Revenue totaled SEK 430 million, and somewhat higher in comparable currency, so this gives us a growth around 30%. This comes of course, on the backbone of our very strong order intake in the last quarter of 2025.
We see a very high interest in our new products that is also reflected in our order intake, an increase of 27% compared to last year. We've seen a very good continued inflow of small and medium-sized orders. Again, as we've said several times, we see a trend towards higher number of product items per order, as we are to a higher degree selling complete systems rather than just individual products. All in all, good start to the year.
Our order book stands at around SEK 750 million at the end of the quarter, which we, as usual, believe we will be able to deliver within the coming quarters, normally within six to eight months, so the majority to be delivered in second quarter and third quarter of this year. Our gross margin was a little bit lower and this level is primarily because of sales to a customer for onward donation to a third party and there we accepted a lower price. I would say without this, we would have reached a gross margin close to 60%.
As we've said also several times, the growing share of new products, also as we advance further into 2026, will contribute positively to maintaining healthy gross profits over time. We have a variety of new products coming during the year that I will get back to. OpEx investments follow our plans as they have done for many quarters. We increased OpEx with 15% in Q1 versus the same period last year. Operating expenses is primarily personnel cost in R&D, in sales and operations and in other parts of the company, and is related to the market activity levels that we see.
Some of the R&D work, of course, related to future opportunities that we see with certain customers or markets and sales also, related to building on the current sales team so that we can take advantage of the opportunities that we see in many markets. At the end of the quarter, we are around 330 employees in the group. Our margins are due to our business model with outsourced manufacturing, margins fluctuate with our gross margin and our OpEx. Margin was 9.2, and this is in line with what we have seen previously in the first quarters of years. And this time it is related to the slightly lower gross margin.
As you will recall, our target is that operating margin EBIT should exceed 20% over time. As usual, we recommend that you look at INVISIO not one quarter, but at least four q uarters and at best 18 months rolling so you get a better picture of the business development, as each quarter can be very volatile. On a rolling 12-month basis, today we are at 17.5% EBIT margin. Now inventory has for a long time been a competitive advantage for INVISIO and will continue to be so.
We also expect inventory levels to increase somewhat over time, partly because of the many new products we are launching, but also to make sure that any geopolitical dispute or activity will not have a short-term impact on our ability to deliver. Our inventory consists of standard products, but it also consists of key components that we deem necessary for the business for a certain period of time. We have seen on several occasions also related to near-term activities, that fast deliveries is a significant competitive advantage for us in the current market conditions. We will continue to stay at this level and even somewhat higher. Yeah, normally not much to say about cash flow.
Operating activities, SEK 48 million, lower than last year, this is almost always related to when we invoice and when we receive payment. We have a very smooth system where we sell with 30 days payment terms. We also have the same terms with our suppliers. It is all about timing for when we invoice and when we receive payments. Our board of directors have proposed a dividend of SEK 3 per share. We have our Annual General Meeting later today, where the meeting will decide on this proposal. Our objective is to pay out 25%-50% of post-tax profit in dividends over time. With this proposed dividend, we are at 48% for the last five-year period, so within our objectives.
From an operational point of view, from a business point of view, what we have seen during the quarter is, very happy to report the first deliveries of some of our really key products, the new INVISIO T30 headset, which we know will address very large user groups. The INVISIO Link wireless intercom that strengthens our total product portfolio, and this is the solution we have sold to the United States Coast Guard. Our H-Series, the data hubs that enables integration of multiple products and functions on body-worn soldier systems. This broader offering really strengthens our ability to meet the customer's growing demand for complete and integrated system solutions. This takes us to the next level. Now manufacturing and deliveries is slowly ramping up, especially on the T30.
It takes a little bit of time in the beginning to get up, but we are very focused on making sure that we can meet the anticipated demands for these new products, and especially the T30, where we have delivered the first solutions this quarter. As we said, there has been a prolonged U.S. government shutdown, especially in the Homeland Security area. It is over now, but it did impact our order intake in the first quarter. We expect these delays to be recouped during the year, so hopefully we should be seeing a solid order intake also from the U.S. side before the end of the year. As you might recall, in the fourth quarter of 2025, we entered into a very important agreement, strategically important, with the U.S. Coast Guard.
It is our first major contract in the maritime segment, and apart from the contract itself, it also opens door to other US Coast Guard units, but also coast guards globally and other maritime organizations globally. We have already seen great interest from other organizations to test and try out the solution here, and we expect this to be a very significant order contributor to our business for a long time to come. It is really a unique solution that we are proposing here. Not much has changed. We are still in a very uncertain political landscape that continues to keep defense and security high on the agenda.
Adding to that, there is a fundamental need for modern communications equipment in many countries that needs to be added or updated. These factors lead us to expect continued high demand in 2026 and for many years to come. A little bit business as usual. With that, I conclude the presentation for today, and we open up for questions, please.
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. The next question comes from Adrian Elmblad from Nordea. Please go ahead
Good afternoon, guys. Two questions for me, please. I think three of them. I'll take them one by one. Firstly, I think the major thing here is obviously the gross margin. Is it fair to assume that this is completely a one-off and that you will have no effect of this in Q2?
Yes, it is a one-off in Q1, there is no ongoing activity related to this in Q2 or other quarters. As you know, also well, for many years our even our gross margin can fluctuate because we are selling in different ways. Sometimes we sell direct, sometimes we sell through a system integrator, sometimes through a law enforcement reseller. We have a gross margin that can vary greatly from 50% and up to a lot higher. It is the average of all of our business that gives us that number. Normally, our gross margin has been around 60%, it will fluctuate given some of these business characteristics. This particular one is a one-off. Yes.
Yeah. Right. Fair enough. Another question that I have is regarding the U.S. government shutdown. Kind of it sounds like it has resolved, if I'm not mistaken. Should we expect any form of catch-up effect, or do you only think that, you know, sales and perhaps order intake will normalize? Adding to the order intake here, can you sort of comment on how much the order intake in Q1 that came from Europe versus U.S.?
I would say the majority is definitely coming from Europe in Q1. In terms of catching up and so on, I would say, yes, I think it will catch up because the budget has not been reduced. On the contrary, the budgets for the U.S. administrations are higher than they were last year. I would expect the business to definitely catch up in the coming quarters. How fast that goes, it's always hard to say when people return to work after a period of time. We expect to catch up in the coming quarters.
Last question, if that's fine. Just if I'm not mistaken, the T30 headset, it's targeting larger volumes, right? Than you normally sell. You're targeting green army soldiers, basically. Can you comment on the kind of beginning here that we've seen in Q1 and the volumes expect for Q2 and onwards? Are these for green army soldiers or kind of special operation still?
In the beginning, it is a little bit of both, test units for armies and a little bit larger volumes will be expected for special operations, going forward. We will continue to increase our output over the coming quarters so that we can reach basically any level that is needed at the end of the day. It will take us a quarter or two before we are fully up and running in high volume.
Okay. Fair enough. Thank you. That was all for me.
Thanks, Adrian.
The next question comes from Hjalmar Ahlberg from Redeye. Please go ahead.
Thank you. Just to start with a follow-up on the last question on T30, regarding ramp up of production. I mean, has that been a limiting factor that you have not been able to ramp up, or is it more like that you're planning that in line with the kind of expected demand that you see in the coming quarters?
No, it has not been a limiting factor. This has been according to plan. We know that the ramp-up phase is going to take time. We're also at the last phase of the internal environmental testing, as we call them, of the products, and everything has to fall into place. In the beginning of a new product, it always takes quite a bit more time in manufacturing. As we now get volumes up, the time each headset take to manufacture will go down. That is a process that will continue over the coming quarters here. This is a quite normal ramp-up phase for us.
We are, of course, very, very focused on the fact that we expect this to be a high volume product, probably higher than any volume we have seen before.
Understood. Another question. I mean, if you look at the kind of end users for your products, I mean, I guess look at greater demand, greater deliveries or vehicles, I guess this has been asked before. Do you see anything new in terms of the broad market that indicates that you could see growing order intake in the coming quarters, I mean like budgets and so on, or is that further out, maybe?
It's hard to say because it's a little bit different from country to country. The consolidation is a little hard to do. We are seeing signs of certain countries where the focus on soldier equipment is great now, and other countries where they are still focusing on vehicles and other types of things. There is a lot going on, and sometimes it's very hard for us to estimate the timelines. We can see that a process is ongoing, but it's hard for us to know whether the process will finalize in this year or into next year, and so on. It's definitely in progress
All right. Then, also on your OpEx, I guess it grew maybe slightly less than expected maybe, but, or if you look at the last quarter as well. You are saying basically that it is in line with expectation. Do you see any, I mean, if you look out the next few years, do you think it will continue to grow this trend, or we see it flattening out, giving more operating leverage if you look, longer term?
It's hard to say, also because we are constantly being introduced to new possible product solutions that we could make. It's a constant sort of decision making for our part to decide which new products will we start looking at. Does that mean we can do it with our existing resources? Do we need more resources? Are there market activities that will lead or give us a need to hire more salespeople to be able to cope? It's something we constantly evaluate quarter by quarter. As I've said before, I do believe that the growth in revenues will be greater than the growth in OpEx over time.
We are in a situation right now in the markets where there is a lot of things going on, a lot of uncertainty, and therefore it's very hard to keep straight lines. We are quarter by quarter evaluating both our OpEx side and the revenue side.
I see. Just a final question on your maritime, what comes from new maritime customers. Do you have any kind of expectation or guesstimate on the timeframe from test orders to volume orders for new customers in this segment?
No, not really. Of course, it does take time because we are in a maritime environment. You are on a boat environment. You need to in each boat type, find out what the installation should look like, how the user scenario should be and so forth. But on the other hand, the potential is really great.
Okay. Thank you very much.
Thanks, Hjalmar.
The next question comes from Daniel Thorsson from ABG Sundal Collier. Please go ahead.
Yes. Thank you very much. Just a quick one first. I don't know if you mentioned it, but how large was the donation delivery in the quarter?
Don't, we don't mention that. That's, that's confidential. The only thing I said was that it impacted the gross margin to an extent that the gross margin would have been 59%, 60% without it.
Yeah, I see. Okay, the other way. Can you say roughly what the gross margin was on that order? I mean, is it?
10%, or is it?
No.
40% or? [crosstalk]
It's closer to the latter. It's not 10%. It's closer to, Yeah.
Okay. I see. Okay, I see. That's fine. Secondly, that could affect gross margin. Have you seen any rising memory prices affecting your input costs or other spare parts in the products affecting the gross margin negatively in Q1, or is that something that could have an impact in 2026?
Not yet. No, we haven't seen that. As I've said, we are also very, very diligent in keeping long or large inventories of long lead time components and those of the components that we consider to be at risk for whatever purpose. I think we are handling this well. Here we have the advantage of working with very large Original Equipment Manufacturers that has a good insight into what happens on the component markets and also have the buying power to make sure we get the benefits of that power. No, we have not seen any impact.
Clear. Finally on the U.S. Coast Guard here, the $25 million initial order we got half a year ago, roughly.
Has that been delivered now in Q4, Q1?
Yes, yes.
Yeah.
Fully delivered. Yep.
Oh, okay. Perfect. Have you got any follow-up orders in Q1 that you just haven't announced because they were too small?
No. No.
Okay.
Not yet. Not related to this.
And could they [crosstalk].
I see. Okay. Clear. What should we expect for the full year from U.S. Coast Guard? Have you set any ballpark figure, like $100 million or something like that in terms of orders?
No, not really. Your guess is as good as mine, but the contract is for 10 years and $100 million, so divided by 10.
Yeah.
Anybody's guess.
Okay. That's fair enough. Thank you very much.
Thank you.
The next question comes from Erik Hellberg from Cantor Fitzgerald. Please go ahead.
Hey, Lars. Congratulations on the strongest Q1 to date in revenue terms. I have a question regarding the order intake. I understand that defense orders are inherently lumpy. I was wondering if there's anything specific in the Q1 pipeline that maybe slipped or got rephased. Maybe you can give us some flavor around how you see the order intake trajectory shaping up into the second quarter. Maybe off that question, regarding the European tender pipeline, maybe you could update us on the activity level that you're currently seeing and decision timing, what we can pretty much expect for the remainder of the year? Thank you.
Yeah. I would say for in terms of slippage in Q1, the major thing has been related to the U.S. government shutdown. That has definitely delayed order intake in the U.S., and as I said, we expect to be able to make up for that in the remainder of the year. In Europe, it is the usual fluctuations between the quarters because as again, the customers unfortunately don't care too much about our financial quarters. They make their own decisions in their time. I think though that without having any real proof or anything that I can communicate around, I think there are customers expecting, waiting for our T30 to be fully released and for them to have enough samples to evaluate.
Therefore, holding back some orders until they are able to place them on the T30. Because up until now, we have limited amount of products available. We have limited amount of samples available for testing. Once that number goes up, and the customers have a little time to evaluate, I think we will see a lot more orders on the T30. The customers need to have them in their hands, and they need to test them for a certain period of time. This is definitely a product that we have high expectations for.
Okay. Understand. I've seen that the U.K. MOD's Land Environment Technical Communication Framework opened this year. Can you confirm that INVISIO is participating? Maybe how can you see the timeline developing for the potential first call-offs?
I mean, we participate in, I would say, almost all. I can't think of any tender or market activity related to our product category that we do not participate in. Yes, we do participate.
I cannot tell you about because I really don't know. They, they are, as always, uncertain, or not well-defined. I will not give timelines to any activity we do because we know that they will, they will be moved around. Sometimes they will be delayed, sometimes they will be moved forward. We, we do not give any expected timelines on any of the activities we work on.
All right. Thanks. Maybe one last question on capital allocation. I mean, you have net cash on the balance sheet. You spoke about the dividend already. You had a share buyback at the end of last year. Do you have any, I mean, capital allocation priorities maybe around M&A in adjacent technologies or geographies that you can speak about?
I would only say, that the company has a possibility to do share buyback. We have possibility to do M&A, and we will also spend some of the money on dividends, if approved, later today.
Then on inventory, as I said, this is a very important part for us to be able to manage the business efficiently and win business in competition with others because we have a great inventory situation. I would say, yeah, these are the four areas. We will consider all of them.
Okay. Perfect. Thanks and congrats again.
Thank you.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. The next question comes from Yiwei Ju from SEB. Please go ahead.
Hi, Lars. It's Wei. Two questions from my side. Firstly, just want to follow up on this gross margin impact here in Q1. As I understand, you also had some donation sales previous years. Is there any particular reason why the margin dilution is such big in this quarter?
No. So it varies a little bit from customer to customer, country to country, how it's done. Sometimes even with the normal business, sometimes you have a customer who is telling you that I have a budget for this amount of money. I need this amount of quantity. Can we do business? Sometimes we say no, and sometimes we say yes. In this case, we said yes because we believed that this was still a good business, for us, even though, that it is a little lower margin. It also gives us a good goodwill with customers and countries, and there could be many reasons for this. Yeah, I would say there was no particular thing here more than making ends meet and having a happy customer.
Okay. Just want to also ask on this topic. If you're looking at the timing of those donation sales compared to last year, are they following the same pattern?
No, they are random. They have been random for a long time, and they will be. Donation sales comes in many different shapes and forms. As you know, there's also related to the U.S., something called Foreign Military Sales, where the U.S. will either donate or sell to different countries under different ways and forms. These comes in many different forms and shapes, so it's very difficult to generalize around this.
Okay. Thank you. Another question for the U.S. market. I mean, besides the partial government shutdown, any structure change in this market? We got that historically has been some sort of local, small local players being present for many years. Are you seeing them being more proactive and winning customers?
No, I would characterize it as being status quo. It is still the same market. Of course, all markets in the world, including the U.S., is more active in terms of looking for new solutions because of the general political situation across the globe. And I think also in the U.S., the administration or the government has been proposing very large increases to the defense budgets going forward. Whether those will be adopted, we will need to see, but there's definitely expectations to a strong defense budget going forward. That, of course, will mean that any competitor in the market will try to get as much of this as possible.
There's no structural change. There's no new entrants, at least not to my knowledge.
Okay. I mean, and, when we're looking at some countries in Europe, the military procurements tend to favor the local players. You historically have been sort of very strong in the U.S. I mean, now given the geopolitical tensions here, are you concerned about some of the U.S. customers, they could also switch to local players?
No, I don't think so, and I don't think it will happen either in Europe in general. I think we are still in a niche market for soldier protection and communication, and I think here in niche it is about performance. It is about providing the best possible solution. Then, of course, as part of what we offer, due to the fact that we have a very large network of manufacturers, we can actually offer manufacturing in, I would say probably 10 countries by now. In many cases, that would be a benefit. We can offer manufacturing in the U.S. also if that is needed or in a handful of countries in Europe and so on.
I actually think we have a competitive advantage compared to some of our competitors because none of our U.S. competitors have any manufacturing in Europe. If they were trying to get into Europe, they would be shipping from a U.S. manufacturing base. I think we are in a good position here with our many manufacturing partners.
Understood. Thank you so much.
Thank you, Wei.
Thanks.
There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
All right. Thank you all very much for calling in and listening in, and talk to you again after our Q2 report in July. Thank you