Welcome to the QleanAir Q3 2025 report presentation. For the first part of the presentation, participants will be in listen-only mode. During the Q&A session, participants are able to ask questions by dialing pound key five on their telephone keypad. If you are listening to the presentation via webcast, you can ask written questions using the form below. Now, I will hand the conference over to CEO Sebastian Lindström and CFO Fredrik Sandelin. Please go ahead.
Hi, and welcome to the QleanAir investor presentation for Q3 2025. My name is Sebastian Lindström. I'm the CEO of QleanAir, and joining me in today's call is Fredrik Sandelin, CFO at QleanAir since 1st of April this year. Fredrik and I will go through the presentation and then open for Q&A towards the end. Let's dive straight into the numbers for Q3. We delivered SEK 108 million in sales in the quarter, which was 4.4% below last year in Swedish kronor. If we look in constant currency, we grew 2% in the quarter, which is a strong achievement of our sales team in a very tough market environment.
Driving the growth in constant currency, we're a strong quarter for cabins in Japan, up 4% in local currency, and a strong quarter for Cleanrooms in the U.S., + 15% in local currency in the quarter, and a European growth on Air Cleaners of over 5%. Our new products, focused on critical areas of the industry, are continuing to drive growth and mitigate the difficult market conditions in Europe in particular. Our systematic approach is really sharpening our range, and in September, we launched our first bespoke product to help solve the challenges of welding fumes in the industry. Already in October, we had our first orders from customers on this product in Europe. Our recurring revenues remain stable at SEK 66 million, amounting to SEK 202 million by the end of September.
The decline of last year is attributed to the cancellation of COVID-related contracts that we reported on back in 2024. Our gross margin is strong and stable. We see improvements, especially in Air Cleaners and Cleanrooms. Gross margins for Cabin Solutions remain high and stable. Our EBIT margin of 6.6% was a big improvement over last year's 3.7%. Our EBIT for Q3 was SEK 7.1 million versus SEK 4.2 million last year. Cash flow was record high. Our very focused work on balance sheet items like inventory and accounts receivables month to month with our teams has really paid off. Summing up the quarter, we still have work to do. We'll keep our focus on the three objectives towards long-term profitable growth: cost control, sales efficiency, and customer focus. Now, let's have a look at the regional perspective, and starting off with EMEA.
It's an important region for us, accounting for 45% of our sales in Q3, and this is where we have our biggest installed base of products of over 6,400 units. The economic environment continues to be weak. Sales cycles are longer, especially in Germany, Austria, and Poland, but also in the Nordics. Our figures show that our strategy to focus on more critical areas for our clients really helps. Air Cleaners grew 5% in the quarter, and we launched in Europe our first product for welding environments towards the end of the quarter. Moving on to Japan, equally important as EMEA, 45% of our sales in the quarter. Here we have an important installed base on cabin side, but we're growing the air cleaner base. Japan is now our third largest market on Air Cleaners.
Renewal base is back on track, but more importantly, we see year-on-year increase in new cabins and in industrial air cleaner sales. Japan grew 2% in constant currency for the quarter. To finish off the regional review, we have the U.S. The team in the U.S. has made a strong recovery from last year. We have, over the last two years, worked through COGS, installation cost, organization, and it is now clearly visible through our P&L. In Q3, we continued to grow with projects on already existing clients. The contract worth $647,000 is for two rooms to be built in 2026, adding up to 11 rooms now with this client over the last nine years. We continue to build up our backlog and pipeline with new key ideas, safeguarding our long-term growth within Cleanrooms in the U.S. Over to the new welding solution.
Our systematic approach to the product development, where we every year run through workshops with both our own sales and service teams, but also selected clients, has really helped us in the tough market conditions of the industry. As a result of this systematic approach and the exploration work we've done, or the really close work we've done with some really pinpointed clients in Sweden, Germany, and France, we now launch our first bespoke product targeting the welding fume challenge of the industry, the FS 70 Welding. The welding fume challenge is big. It's well known. We estimate that more than 1 million people are exposed to welding fumes in the workspace in Europe alone. There are several industry segments that are affected, but 2/3 of the people exposed are within the metalworking industry. We estimate that there are over 50,000 companies in Europe that we can target for this solution.
The pain points are clear. There is a clear health risk for the welders themselves. Awareness about this is growing stronger, and stricter regulations have been introduced. Attracting and retaining this skilled workforce is critical for many companies. In addition to these very important health-related challenges, there are additional challenges for the industry in increased maintenance due to residue from welding fumes on equipment and production equipment, contaminants on products leading to test failures or reduced lifespan of products. There are solutions today, but they cannot solve the issue. There are local exhaust ventilation solutions, but they are difficult to use, especially when welding larger items. There are, of course, the general ventilation systems, but they are not sufficient to handle this.
There are solutions for personal protective equipment, but these restrict the flexibility of the welder, and they do nothing to protect the people around the welding stations. We believe that we will be able to develop solutions both for the welders themselves as well as for the environment around the welding stations. In September, we launch our first bespoke solution targeting these challenges, the FS 70 Welding. It has been developed after months of testing different solutions together with five prospective clients across Europe. With this solution, we can capture airborne welding fumes that escape current solutions, and we recirculate the clean air back into the workspace. In doing so, we create a healthier environment for the people, we protect the products, and reduce maintenance costs. With the FS 70 Welding, we expand our already broad base of solutions for indoor air quality.
We now have solutions for the industry tackling several key problem areas: welding fume and grinding dust, dry dust, oil mist, gases and odors, mold, virus and bacteria, powder ingredients, product contamination, hazardous drugs, fibers, combustion particles, pollen, and outdoor pollution. I have alluded to it several times. The market environment is in part tough out there, but we maintain a high activity level. As seen here, this slide shows a sample of where we've been pushing our solutions to help and support new clients and thereby grow our business in the past quarter. The high activity level cuts across all regions, from Japan in the east to the U.S. in the west. Over to our operational agenda. When it comes to our focus, we stick to our prioritized objectives: cost control, sales efficiency, and customer focus.
Starting off on the cost control side, we have clearly materialized improvements in COGS, especially in the U.S. Our consolidation of supply chain for service material that we concluded by the second half of 2024 in Europe is clearly supporting our gross margin improvements. Our value engineering projects on Air Cleaners and Cabins are on track, and we should start seeing benefits from these in the first half of 2026. Moving over to sales efficiency, the new bespoke solutions for oil mist and now for welding have really improved our time to market. On the operational side, we have now adopted a more decentralized structure in Europe with full responsibility for sales, service, and marketing into the three regions of Europe: Nordics and Poland, France Benelux, and DACH. When it comes to customer focus, we continue our explorations for further bespoke solutions for the industry.
We're looking at oil mist in the food sector, handling both animalic and vegetable oils, and further segments within welding. We continue also our work on the digital side with SEO and SEM and have launched a restructured website with much more targeted focus on our focus areas. Before handing over to Fredrik and the financial section, let me summarize the key takeaways from my perspective of this quarter. Number one, we have a great success from our product launches. Our structured approach with annual workshops with our sales and service teams and selected clients really delivers. Product launches made in the last 18 months made up 22% of our unit sales on Air Cleaners during this quarter. We have positive momentum in Japan, growing new sales of both cabins and industrial Air Cleaners, growth in local currency of 2%.
In the U.S., we continue adding new clean room projects with existing customers and have built a strong backlog and pipeline going into 2026. Our focus on cash flow in 2025 is really paying off as we report record high cash flow in the quarter. There is a strong global potential for our products globally, but we maintain, of course, a cautious outlook for Europe given the tough economic environment. With that said, I hand over to Fredrik.
Thank you. Let's have a look at some numbers. To the left, we have the quarterly sales, quarter- after- quarter. Last quarter, revenue was SEK 108 million. Adjusted for the negative currency effect we had in that quarter, revenue was SEK 115 million. The negative currency effect in the quarter was SEK 7.4 million. That was a result from the weak Japanese yen.
As you can see, we are more or less in line with the corresponding quarter last year. Recurring revenue is in line with previous two quarters. Compared to corresponding quarter in 2024, it is a slight decrease. Adjusted for the currency effect, it is in line with last year. To the upper right, we have gross profit and gross margin. Gross margin is stable, and gross profit is slightly ahead of corresponding quarter last year. To the bottom right, we have the operating profit and operating margin. After a negative trend for two years, we are now, for the last three quarters, present a positive profit and margin in line with what we had one and a half years ago. On the left-hand side, we see the split between recurring revenue, sales of agreements to finance companies, and product sales.
To the right, the corresponding split for units that we hold on our balance sheet, finance companies, and sold units. The installed base is stable over time, and the revenue split is primarily affected by the declining recurring revenues because of the cancellations for the German schools during 2024. Looking at the installed base to the right, we see at the bottom the units we have on our own books. Book value of these units is only SEK 41 million, and they generate revenues of around SEK 300 million every year. We have an asset-like business model with low CapEx. I would like to highlight that our base for renewals have come back to more normal levels in Japan. These renewals typically follow a three-year cyclical pattern.
To understand how this affects the present, you must go back three years and look at the sales to finance companies at that time. Still, we do not get the full benefit as the Japanese yen has lost value towards the Swedish krona during this three-year period. Our recurring revenue, i.e., long-term customer contracts, are stable at a high level. Churn to the right is back after a high level in 2024 to a more normal level. Retention rate when our customer agreements expire is high. To the left, you can see that our recurring revenue is stable over time, even if our total revenue fluctuates. To the right, you can see that our profitability is heading upwards again to more normal levels after a trend with negative development for the last two years. We've had a very strong cash flow both in this quarter and year to date.
Operating cash flow of SEK 30 million in a single quarter is very good for us. Of this SEK 30 million in the quarter, approximately SEK 10 million come from good results, and SEK 20 million come from our focus on working capital. Both inventory and accounts receivable have been reduced. We have a stable financial situation. Interest-bearing debt continues to come down. One reason for that is that we amortize around SEK 40 million per year on our term loan from our cash flow. Equity to total asset ratio continues to improve. Now it is at 35%. With that, I hand it back over to you, Sebastian.
Thank you, Fredrik. To close off the session in front of the Q&A, what we do at QleanAir is really important. We dedicate our work to improve the health of people, the quality of products, and the performance of processes.
We do so throughout our three product categories: Cabin Solutions, Air Cleaners, and Cleanrooms. Looking at the amount of clean air that is delivered through our solutions, we estimate that we have cleaned over 9 billion cubic meters of indoor air by the end of Q3. It matters as air pollution is a key challenge for human health. People die prematurely from exposure to polluted air, and we spend an important part of our lives in indoor environments. Indoor environments are often more polluted than outdoor air. Before going into Q&A, let me reiterate. We are sticking to our plan. Our approach to operational and strategic development is very systematic. We have three operational priorities: sales efficiency, customer focus, and cost control.
We have focused product development that has given us 10 successful products in the last 18 months, and we have a targeted go-to-market approach. With that, I open up for questions.
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. As a reminder, if you wish to ask a question, please dial pound key five on your telephone keypad. There are no phone questions at this time, so I hand the conference back to the speakers for any written questions and closing comments.
Thank you. Unfortunately, no questions, but if there are no further questions, I would like to reiterate.
Our communicated financial targets remain: delivering 7%-13% organic growth annually and building up our EBIT margin into the range of 15%-20% in the medium term. Taking our company to new levels is a journey. We have a very structured and systematic approach to this that we stick to, and we're convinced that this is the right way and that it will yield financial results and allow us to meet our communicated financial objectives in the mid to long term. Thank you, everyone, for your participation and interest in QleanAir, and we wish you a great continuation of the day. Thank you.
Thank you.