Enea outlines SEK 20M share buyback plan as Q3 net sales fall 4.8%

• “I'm not happy at all with the situation where we are today where we, in the short term, have had headwinds when it comes to our net sales development, where we in the quarter are reporting a 4.8% decline in our net sales.” (President & CEO Teemu Salmi)

• “We see a delay with customer decision-making in the Middle East that has an impact on our earnings.” (President & CEO Teemu Salmi) “The increased price of memory and hardware in general on the market is leading to also that longer decision time making on our customer sites.” (President & CEO Teemu Salmi) “Now having said this, we don't see a necessary loss of business, but we see that the decision taking time is longer than usual.” (President & CEO Teemu Salmi)

• “For the second consecutive quarter, we are showing a very strong operational cash flow.” (President & CEO Teemu Salmi) “That, in turn, has made the Board to have an intention to start a share buyback program with a value of SEK 20 million under the grants given by the Annual General Meeting earlier on this year.” (President & CEO Teemu Salmi)

• “We have 8 new customers signed in the quarter whereof 7 are in our growth portfolio.” (President & CEO Teemu Salmi) “We unfortunately see a little bit of faster decline in parts of our classic portfolio that we did not foresee earlier on in the year.” (President & CEO Teemu Salmi)

• “In the quarter, we reported a partnership with FoxIO.” (President & CEO Teemu Salmi) “This will make our world-class DPI even better and our offering to the market even stronger.” (President & CEO Teemu Salmi)

• “Our next firewall release that will come, Release 11, will have a majority part of that release will be AI-driven capabilities that we will deliver to the market and our customers.” (President & CEO Teemu Salmi) “We are investing in an AI center of excellence.” (President & CEO Teemu Salmi)

• “Enea reports net sales of SEK 202 million for the quarter, which is roughly a 5% decline with currency adjustments, we reporting a minus 6% decline.” (Chief Financial Officer Ulf Stigberg) “We're reporting a 23% adjusted EBITDA for the quarter corresponding to SEK 47.3 million compared to SEK 70.3 million for the quarter last year.” (Chief Financial Officer Ulf Stigberg)

• “I would like to take the opportunity after now 13 reported quarterly -- or delivered quarterly reports. Thank you Ulf for his dedication and great work and contribution to Enea as a CFO.” (President & CEO Teemu Salmi) “I would like to take the opportunity to welcome our incoming CFO, Sophie Reinius.” (President & CEO Teemu Salmi)

Outlook

• “We leave our guidance unchanged.” (President & CEO Teemu Salmi) “We see a stable to moderately positive market for our products and solutions and offerings.” (President & CEO Teemu Salmi)

• “We actually have a solid and growing pipeline, which is supporting our strategic ambition.” (President & CEO Teemu Salmi) “We are fully focused on delivering a stronger and better quarter 4.” (President & CEO Teemu Salmi)

• “We said all the beginning -- from the beginning when it comes to launching our strategy for '26 to '28 that 2026 will be a year of investment and that we will not see the imminent growth in the year of 2026 but it will accelerate from 2027 and 2028 onwards.” (President & CEO Teemu Salmi)

Financial Results

• “We have net sales reported of SEK 202 million, which is a drop of 4.8% year-over-year.” (President & CEO Teemu Salmi) “We have a margin of 23% in the quarter.” (President & CEO Teemu Salmi) “We reported an earnings per share of SEK 0.35 and, like I said, operating cash flow of SEK 66 million in the quarter continues to be strong.” (President & CEO Teemu Salmi)

• “We are reporting a 6% adjusted EBIT margin corresponding to SEK 11.4 million compared to SEK 31.8 million a year ago.” (Chief Financial Officer Stigberg) “This reports down to EPS of SEK 0.34 for the quarter compared to SEK 1.77 for Q3 last year.” (Chief Financial Officer Stigberg)

• “The cost includes annual salary review, some direct costs related to project deliveries and also related to the long-term incentive program that was decided on the AGM earlier this year.” (Chief Financial Officer Stigberg)

• “Year-to-date, we have a growth of 5% in the growth portfolio.” (Chief Financial Officer Stigberg) “In the classic portfolio... network access control... minus 16% growth compared to previous year.” (Chief Financial Officer Stigberg) “And the operating system reports a minus 20%, which is according to plan.” (Chief Financial Officer Stigberg)

• “In the quarter, we reported SEK 66 million operational cash flow compared to SEK 20 million last -- Q3 last year.” (Chief Financial Officer Stigberg) “This results in a net debt improvement on SEK 163 million in the balance for Q3 this year.” (Chief Financial Officer Stigberg) “Equity ratio for the quarter, 71.3% and net debt to EBITDA ratio 0.66%.” (Chief Financial Officer Stigberg)

Q&A

• Rasmus Jacobsson, Redeye AB: “could you perhaps quantify the deals you see slipping here in Q3, please?” President & CEO Salmi: “I would say it's a double-digit million SEK number.”

• Rasmus Jacobsson, Redeye AB: “are these the deals that you had earlier in the year... or... new slippages” President & CEO Salmi: “It's a mix.”

• Rasmus Jacobsson, Redeye AB: “what you are planning on doing to improve the conversion and decision-making?” President & CEO Salmi: “the geographical split for Q4 looks a bit different... now in the quarter 4, we have a pipeline that looks a bit more geographically better spread as well.”

• Written question: “why not bigger share buybacks? You have annual free cash flow of SEK 200 million.” President & CEO Salmi: “I think personally, right now, I think it's a good starting point.”

• Written question: “How credible are your 2026 goals of annual average plus 10% sales growth...” President & CEO Salmi: “our short term guidance for 2026 has always been single-digit growth with an adjusted EBITDA of 30% and above.”

Sentiment Analysis

• “I'm not happy at all with the situation where we are today” (President & CEO Salmi) anchored management’s prepared remarks in a slightly negative tone, while still pointing to offsets including “a stable to moderately positive market” (President & CEO Salmi).

• Analyst tone was focused on execution risk and timing; questions pressed for quantification of slippage and actions to improve conversion, including “could you perhaps quantify the deals you see slipping here in Q3, please?” (Rasmus Jacobsson, Redeye AB).

• Versus the prior quarter’s heavier emphasis on growth-portfolio momentum and cash flow, this quarter’s language shifted more toward near-term headwinds, while confidence on strategy remained via “Our long-term financial ambition stays the same, no changes to that.” (President & CEO Salmi)

Quarter-over-Quarter Comparison

• Q3 management characterization shifted from Q2’s “good development in our growth portfolio” and “a very strong operational cash flow” (President & CEO Salmi, Q2) to Q3’s explicit disappointment and “headwinds” tied to Middle East timing and hardware costs (President & CEO Salmi, Q3).

• Capital return framing changed from Q2’s “We've communicated a pause” on buybacks (President & CEO Salmi, Q2) to Q3’s “intention to start a share buyback program with a value of SEK 20 million” (President & CEO Salmi, Q3).

• Management changes became explicit in Q3 with “you will not hear Ulf in any earnings calls moving ahead” and the introduction of “our incoming CFO, Sophie Reinius” (President & CEO Salmi), which was not present in Q2.

Risks and Concerns

• “The volatility and the war in the Middle East... is creating uncertainty in time to close our deals in that region.” (President & CEO Salmi) “Our sales cycles are becoming a bit longer than they have been in the past.” (President & CEO Salmi)

• “The increased price of memory and hardware in general on the market is leading to also that longer decision time making on our customer sites.” (President & CEO Salmi) Management’s mitigation leaned on pipeline diversification, with “a pipeline that looks a bit more geographically better spread” for Q4 (President & CEO Salmi).

Final Takeaway

Management described Q3 as impacted by delayed customer decisions in the Middle East and higher memory and hardware prices, alongside a stronger cash flow profile that supported the board’s planned SEK 20 million share buyback intention. Leadership reiterated unchanged 2026 guidance and long-term ambitions while emphasizing that 2026 was designed as an investment year, and announced a CFO transition with Sophie Reinius set to join, as Ulf Stigberg remains through December but will not participate in future earnings calls.

Read the full Earnings Call Transcript

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