Welcome to the Profoto Q3 2026 Report Presentation. For the first part of the presentation, 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 CEO Anders Hedebark and CFO Linus Marmstedt. Please go ahead.
Good morning, and welcome to our presentation for the third quarter 2026. Thank you for listening in. The third quarter, we saw a slight sales growth, but it was a totally different demand situation in different geographic regions, and I will be coming back to that. My name is Anders Hedebark. I am the CEO of Profoto, and with me here today, I have Linus Marmstedt, CFO. Our net sales increased by almost 8% to SEK 128 million. The organic growth was slightly less because of currency effects. The sales development varied across regions, and I will come back to that on the next slide a little bit more. To mention here right now, Americas in particular was very good. But that was mainly because of soft comparables. As you know, we are acting towards three types of customers. Number one is large photographic studios.
Number two is the creator type of economy, which is a much larger customer group. Our third change, we are going into the cinema business. First of all, studios, it is similar to a project business, and it varies up and down quarter by quarter and month by month. But over the years, it is fairly stable. Q3 is generally a weak quarter for this kind of business, and hence, it was also not a very strong quarter in studio sales. We are watching this, but we are not that worried because we think that it will hopefully bounce back. But as said, it remains to be seen in Q4 and Q1 that we are shifting back to a higher demand level. We can also see in this area that the large photographic studios are investing more in LED, and leaving the investments on flash fairly stable over quarters.
That was studio. For the creator side, this is a very large customer group, and in this customer group, you could see different kinds of creators. This is for visual content creation, by the way. First of all, it is the photography first. Secondly, it is the video-first type of creator. A lot of both photographers and videographers, they are asked to do both video and still in the same production. Our focus is to follow the customers from photography to the video and still, and this is a fast-growing part of this market. Overall, this kind of creator market is stable and is growing, and there is a lot of new players, new creators starting, and young creators starting in this market. They are always starting being both photographers and videographers at the same time, and they are very skilled in producing both kind of assets.
We see a lot of change, and we think that Profoto is well-positioned by being the main premium brand for this kind of creators. And we drive sales in this market very much through large dealers. We have many large dealers around the world, and especially in the United States, where we need to be very active together with the dealers. You can see this in the quarter, and this is part of the sales growth in the United States, in North America, that we managed to get our partners with us to do a lot of activities in terms of both marketing, but also a lot of physical activities like demos and other kinds of venues where we get together with our main customer group. Because bear in mind that creating great light in either still or video images means that you do something by hand.
It is not something that you can do online. It is something that you do in real life. We also see that a lot of these creators, they are dedicated to setting light at point of capture. Yes, they're using AI to make the images better, and yes, they're using Photoshop and other tools to make this happen, but everything happens at point of creation, point of capture, when they actually do their create. It is an important part of our brand and our industry, and we see growth in this area. The third customer area that we are working hard in is the cinema market. Here we are doing a market entry. Profoto is the first time that we're really selling into this area, and the sales has start, the invoicing has started as we communicated over the quarters.
What we're doing here is that we're ensuring that the gaffers and DoP, this means the electricians that is actually setting and making lighting possible at the set of the cinema set as well as director of photographers, they know and that they are using, they've tried, they're aware of, and that they actually love using our products. We are working with certain great gaffers in order to ensure that they are using our products. This work has just started, and we already now see a demand that gaffers are talking to other gaffers and introducing our Profoto products to each other. Secondly, in order to actually ensure usage, we also need to ensure that the products are available at cinematic rental companies. And we are very successful on that, especially in the U.K., but also in other parts of Europe.
However, a lot of work remains to be done especially in mainland Europe, in areas like Spain or Hungary, for instance, but also in the United States and North America. But we think that we have a very good position, and we see traction in terms of demand. But in sales figures, we see some effect on this quarter's sales figures. However, a lot of work remains, and we hope to expand the sales heavily in this area. In addition to this, our LED product that this is all about, and especially that our ProPanel is demanded in the market, but we also working with getting that product in and other products into the large photographic studios that is slowly migrating from stills only to video and still in the same bay or in the same studio.
We are working with the main studios to ensure that they long-term test our products, and this work has just started. We believe and we hope that we should see a growth in this area in LED sales over the coming quarters and also into next year. The EBIT resulted the sales growth, resulted in some sort of EBIT, and we managed to achieve SEK 19 million in EBIT, but it was positively impacted not only by higher sales but also a refund of tariffs into the United States. This was a big part of the profit, approximately SEK 15 million accounted as a positive cost of goods sold effect. We are working heavily internally with strong cost control and ensure that we have a stable cash flow from our operating activities.
As just said, the ProPanel sales continued according to plan, and we have ensured that it has been used on several production worldwide. One of the production was "Baywatch." We can see two of the panels here on an LED set being used. Across the regions, we see a good organic growth in Americas and EMEA, whereas APAC and especially China had a slow quarter. In the U.S. we saw a total change of almost 22%, whereas 1.5% was currency effect, but still organic growth of 20%. Yes, we had soft comparables last year, but I would also like to mention that we have new management on board in the United States, which has had a positive effect on the level of activities.
We have a much higher market activity, both directly on our own, but also together with the large dealers in the United States. In EMEA, we had also soft comparables, but we had a good growth of almost 15% whereas a small part of that was currency effect as you can see. It is based on what we do on our own, that we have a much higher activity in the European market. We have dedicated resources for the large dealers, and we have a good marketing and sales team working hard in the European market to ensure that the customers are getting the hands-on on our product, testing our product, and that the dealers are actively selling the product. Thank you very much all dealers in Europe. Asia, we see a soft sentiment, especially in China, but also in other parts of Asia-Pacific and China.
We see some sort of good traction in Japan, but that is very much based on one large brand studio that did good work for us. Anyway, this is the varied performance that you can see across regions, and we are continuing into fourth quarter with high level of activity, and it remains to be seen then how the fourth quarter will play out. Over to you, Linus.
Okay. Thank you, Anders. As Anders mentioned, top line increased by close to 8%, mainly driven by organic and not so much by currency. That was okay from a top-line perspective, but it is important to bear in mind that the corresponding quarter last year was fairly soft. Then if we look at the EBIT, it looks like we have 50%, which is the truth, but it is affected by the tariff refund of approximately SEK 15 million. So if you adjust for that, it is around over SEK 4 million corresponding to 3% EBIT margin. So it is important to have that as an underlying performance. But if you look at the same corresponding figure for last year, it was -SEK 10 million. So we actually saw quite good rebound in the underlying operating result, which is encouraging.
Also that we have mentioned before is that we have a fairly negative effect from the capitalization/depreciation ratio, which continued to have a negative effect of the EBIT margin as such. Yes, next slide, please. This is a slide that we have shown in previous quarter that we have very good cost control, and as you can see, it has been a fairly sharp reduction in the underlying cost base for several quarters now. The Q3 was, as you can see, SEK 66 million in the underlying cost base, which is seasonally effective, but also that we continue to have a very tight cost control. As we said before, in the second quarter, we had several fairs and so on, which affected that quarter.
We see not a similar effect from fairs, but we will be active on the marketing side in the fourth quarter, partly related to the campaign season as we always see in November, December. So you can expect some increase during the current quarter, but not a major step up, but it will be a slightly uptick. But all in all, very strong cost control. Next. To be able actually to drive sales and to be very flexible in the market, to be able to support our customers, et cetera, it is very important to have a solid financial position. As you can see, we have reduced the net debt quite substantially during the last year.
Now the net debt is around SEK 150 million, and you can also see that the net debt ratio to EBITDA has reduced to 1.2 x EBITDA, which is quite healthy, I believe. Of course, the last quarter has been affected from the tariff refund in two ways. One is that has a positive effect on the EBIT, but also that we actually received the cash in August, so that is also in this equation. But all in all, very solid financial position.
Thank you, Linus. To summarize, we see strong organic growth in some parts of the world. We do positive EBIT, but bear in mind the refund of the tariffs. The ProPanel launch, as we talked a lot about, is progressing. We are doing a lot of changes, and the changes will continue, both because of how the sentiment in the market is changing and the use of AI, and the hard competition that we see from Chinese players. It means that we need to do a lot of changes, and it's affecting all parts of the company and the way that we actually are doing activities.
We will continue to do a lot of market activities in the fourth quarter, so I cannot promise you the result of those, but I could say that we are working very hard, and the team is working very hard in order to get our products in the hands of all the potential customers. We have a solid financial position to back up what we do, and we have a positive operating cash flow. Thank you very much. Please ask questions if you have.
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 Fredrik Reuterhäll from SEB. Please go ahead.
Good morning, Anders and Linus.
Good morning, Fredrik.
Morning. I have a question regarding the tariff refunds. Do you expect anything more next quarters, or this was one-off, so to speak?
This is one of the questions that I expected to receive, so thank you for that one. We have received absolutely the majority of it. If it comes anything more, it is quite tiny numbers, actually. But it might come some, but not the major ones.
Yeah. Okay. That is good. You mentioned also that part of the growth in Americas and EMEA was due to easy comparisons, but what is your perception of the inventory levels of your largest dealers? I mean, we say it is balanced, or was the growth mainly due to restocking, or was it the real demand behind?
It was a real demand behind. We don't see any major variations in stock.
Okay. You touched upon it in the presentation here that you're really working on the cost base. If I remember correctly, I think it was the profit warning in October last year, you said there was going to be a run rate of mid-20 million, roughly. That's correct, right? Now you are slightly below 300. You communicated that the cost base is going to come up a bit more due to marketing spending. But would mid-20 still valid going forward for 2027?
Well, mid-20, I'm not really sure if I had said that before, because that means a cost level of 300. That's more or less where we are at the moment if you see it from a LTM perspective.
We believe that the activity that we are planning for and the strength in all. What we have also said that we will strengthen the sales organization somewhat. So all in all, we believe that the current cost level is what you can expect on the big picture. Then, of course, it can vary a few millions per quarter up and down, but this is what you can expect in the big picture. So a little bit higher than 25, I would say, but not the major ones.
Okay. Do I understand it correctly that you are going to hire more people there in the marketing department, or is it just going to be spent on marketing strategies?
It is more individual positions that we see that we have the possibility to recruit very good people in specific countries or in specific areas. We have a very good organization at the moment, so we do not foresee any major shift in any ways.
Okay. It looks like your new ProPanel is very well received. Can you talk more about the strategy or what you are thinking about this opportunity? LED panels are different than to more rental companies and film and video production, while your flash products are mainly sold in individual studios and photographers. How was your thinking going there?
First of all, the panel is very much dedicated for the cinematic market. As I said, we are working to build a demand through gaffers, who we are working with selected gaffers so that they are using it on set. We are making this known either by ourself or through the gaffer's own community and network that this is a good product. In that way, we are using mouth-to-mouth marketing in order to build demand. This is the only way to do it in the cinematic industry. Even if it is a large market, it is a very high-end influencer-driven market. In addition to that, there must be products available. So we are ensuring that the rental companies in all geographic locations have this available for rental, so that when the demand arises, that they can get hands of the product in their local market.
That is how we are doing the market entry. For instance, we have opened our own office at Pinewood Studios in London. It's one of three large cinematic studios in the U.K. We are working together with selected rental companies in order to ensure availability into the market. This takes time, as all of you can, I'm sure, understand. This will be a slow growth, it will take time before we have a high market share. We are aiming for this with the panel. One should also be aware of that there is a large installed base of old panels of other brands in this market that we're going to try to replace. That is the cinematic market.
For entering, as you said, the studio and the creators, both studios, there's a large installed base in the photographic studios all around the world, whereof we know most of them. We are working actively with the top of those studios when they are also starting to produce video and moving images. We're trying to do that for the large studios. For the creators, we see here the panel is not really demanded, but other types of LED point source products. We are ensuring that the creators, and especially young creators, have the possibility to use both a Profoto flash and Profoto LED on set when they are producing this kind of hybrid productions that they're doing when they're producing both video and still on the same production. Which is demanded by all large brands, by the way.
Yeah. So follow up on the studios, you mentioned in Q2 that there was lack of investment sentiment from studios. Do you see any sign
Yeah
of demand picking up
No
compared to-
I couldn't say that. However, we've been into this business, I've been selling into these kind of studios. I started out there, and this is the Profoto core business, and we know a lot of rentals and a lot of brand studios. So we know that demand goes up and down, not only over the quarters but also over the years. All the brands needed to create a lot of content in order to sell both online and in real life. Yes, we see increasing usage of AI, especially to create shorter videos. But in order to do that, you need to have great input of the apparel that you're shooting. So if you're shooting a shirt or a dress, you need to have detailed product images of that in order to dress the AI models, if that is what you're using.
We also see a trend goes back and forth, and it goes quite fast back and forth, actually, where we've historically seen a lot of investments in AI systems by these kind of studios. But right now, there is a trend swinging back where authenticity is very important, and a lot of brands are telling us that they're not seeing conversion online because AI images is not converting the same way as real images. However, we are not naive in this sector. We understand that the pendulum will swing back and forth. So of course AI is used, and of course AI will be used more, but the magic is happening at the point of capture. And you need to have high-quality images.
Profoto is the partner of the creators to create great images that could be structured in a way so that they convert for the brands that the end users of the images are always great brands all around the world. For instance, we mentioned in Japan last year we had one of the world's largest brands that is buying product. So we are catering for all the brands that you know, that you mentioned, that you could think of all around the world. This is happening in especially we had in the comparable that we mentioned for last year for Japan. We had some good orders in both EMEA and in U.S. in this sector. Even though we would like to do more, we see that the large brand are continuing to invest in this.
Not only the brands, but also the service providers that are shooting for those brands. But the market is changing. AI is being used even more, so we need to adopt and follow the needs of the customers. It goes fast.
Yeah. Interesting. So my last question is regarding the Chinese consumers. They are weak. Believe it or not, but management of Hermès, the French luxury brands, are actually looking at pork prices to assess demand of the products.
Do you have any data points that you're looking at to understand demand? I see, for instance, number of marriages in China is down quite heavily in the first half of 2026. Do you have any secret data points you can give us?
Not really. I'm sorry about that. But no, we don't have any data point that we can communicate with certainty otherwise. We are out there in the market. We're working with the local dealers. We're working directly with large studios, both rental and service providers, and brand studios. We see that a lot of more brands are being built the last years, but not many years. We've seen the brand-building activities has increased, and it is part of our historical positive development in China. So we have a great, good team there with a great manager, but it's all about the activity that we do ourself in the market that is making the difference. But on the other hand, we also see the great Chinese competition, which is producing better and better, launching better and better products. So sorry, I don't have any good data points for you there.
Okay. That was all for me. Thank you very much.
Thank you very much.
You are welcome.
As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions or closing comments.
Okay. I would like to thank you for listening in. We have our next report on February 11th, which is for the fourth quarter and the full year 2026. See you in a quarter. Thank you very much.