Today I have here with me our CFO, Mervi Kerkelä-Hiltunen, and my name is Esa Harju, and I'm the Chief Executive Officer of Teleste. Today Teleste has released its second quarter and first half financial reports, and in this presentation session we will go through the highlights, and we have an opportunity to answer any questions that you may have.

Let's move on to the intro part and the highlights of the second quarter. Just as a recap for those of you who do not follow Teleste regularly, we are an international technology company based out of Finland, listed here in Helsinki, Nasdaq stock exchange, and we are basically through our technology enabling fast broadband services, our key clients being the telecom multi-service operators, and we are providing technology for smooth public transport and also for security in public places.

These two business segments that we have, Networks and Public Safety and Mobility, are the terms that we are referring to throughout the presentation. They are the two reporting segments we have, and some of the financials are also separated out for these two segments.

Just very briefly on these two business segments that we have, the first one being Networks. If you, Mervi, change the slide.

Here our main customers are, as I mentioned, operators for telecom and triple-play services in Europe as well as increasingly in North America. You probably recognize some of the logos we have there, both from Europe and North America.

Our products are around cable infrastructure, fiber infrastructure, video service distribution platforms, intelligent network management software, and related professional services. Our customers are actually serving more than 100 million internet users around the world.

For Public Safety and Mobility, our main customers are the train manufacturers—we refer them to them here as rolling stock manufacturers and integrators. Some of the largest worldwide train manufacturers are our clients.

We are also collaborating and providing our technology to public transport and rail operators in Europe as well as in North America, and we also have public authorities as our customers in safety and transport infrastructure segments. I will then move on to our second quarter earnings results, and in this chart you will see the comparison period, which is the second quarter previous year.

You see the change. You also see the full first half numbers as well as then, as a final reference point on the right-hand side of this table, you see the full year 2025 numbers.

Overall, I think we started and continued the year with a solid execution. Our revenue and order intake actually increased sequentially from the first quarter of the year, even though we fell a little bit short of the strong comparison period we had a year earlier.

Our profitability remained robust, especially looking at our net profit and our earnings per share. We had a very good increase in our profitability compared to the comparison period.

I will now look briefly through the different highlights of the order intake, revenue, and profit, and then Mervi will continue then for some of the details of our financials. I start from the order intake.

The orders received, they actually improved, especially in our Networks segment. There we actually had very high order intake in the second quarter.

Europe here was this time particularly strong. We have some quarterly fluctuation in the order intake in both of our segments.

In the second quarter, Europe was particularly delivering a lot of good orders for multiple customers in multiple product segments. In Public Safety and Mobility, our orders were lower than the comparison period, but we are actually expecting a strong order intake flow in the second half of the year in our Public Safety and Mobility segment.

In this business, which is a product—sorry, project business where the awards are happening when these large contracts are being awarded, the timing of the orders is always a little bit uncertain and difficult for us to estimate, and also quarters may look different from one another. Overall, we feel that for the full year we will have a good, very good order intake trend for the Public Safety and Mobility as well.

In this segment, our orders actually declined compared to the previous quarter last year—for the same quarter last year—but sequentially we actually improved. Our long-term market drivers and customer demand remain completely unchanged, but clearly we are expecting also in Networks business orders to to continue to grow in the second half as our—especially in North America, our main customer is going through a merger in North America, and this merger is now being brought to a close in the very near future, and we are expecting this to have an impact on the investments in North America as well.

In the pie chart there you can see then the breakdown of how the orders received are divided to these two segments for the first half of the year. It's relatively well representing the the revenue split as well, even though this time we had an higher—relatively speaking, higher order intake in the Networks segment.

Moving on then looking at our net sales. Net sales remained at a solid level, broadly matching the comparison period, a little bit short of the comparison period, but as we mentioned, increasing sequentially from the first quarter of this year.

In those bar charts you actually see two previous financial years by quarter. On the pie charts on the on the right side, you see, first of all, the rolling 12 months geographical distribution.

Looking at that chart, you can see that the the breakdown that happens compared to the year ago, we said there's a slight difference there because the North American orders have been a little bit short compared to the previous times due to the merger that is happening in North America, but as I mentioned, we are expecting this situation to change once this customer merger transactions are moving to an integration phase. In the bottom pie chart there you can see the division of our net sales by segment in the second quarter.

As you can see there, the Networks represented 56% of our revenues, and Public Safety and Mobility represented 44% of the revenues. Then moving on to the cumulative adjusted EBIT, and looking at the second quarter EBIT, our profitability showed a good progression and good trend.

This profitability improvement was driven by product and project mix as well as very disciplined cost control, both in our variable costs and our fixed costs. We have been very cost-conscious, and even under the component price pressure, we've been able to protect our margins, I would say, extremely well.

We, of course, continue to make investments into innovation and technology. We're a technology company, and a very high portion of our revenues are flowing back to R&D.

We are also strengthening our operational capability, especially in North America for Networks, and then for Public Safety and Mobility, and with our key customers, the customer base there is actually growing. Overall, our execution is very well on track here, and we are strengthening our confidence in our strategy and our long-term value creation capabilities.

In the pie charts, you can see comparison periods also from '24 and '25. The green one there is now showing the 2026 progression for this year to date.

Moving on then looking at our financial outlook. No change here.

Our guidance for the full year, as we announced it back in February this year, is that we are expecting our net sales to be in the range of €140 to €160 million and adjusted operating profit in the range of €7 to €10 million. We are expecting still this profit to be more weighted towards the second half of the year, and notably within the second half of the year, we are expecting higher profitability for the final quarter of the year or for the final months of the year.

Then we have and we retain the typical or the customary disclaimer here that if there are some major changes to the operating environment, then obviously we will update or specify our guidance as we move forward. All right.

This was a very high-level update of the key financials, and now Mervi, our CFO, if you continue for a while, and we also look at some of the balance sheet items, and then we will reserve some time in the end for for questions.

Okay. Good morning, good afternoon, everyone.

Thanks for joining this this call. Let's now walk through a bit more detailed our financials.

Here you can see our profitability down to the net net results. Here specifically when we look at our group-level numbers, our first half was pretty much on stable on net sales level, no major changes there.

Particularly when we look at the numbers a bit detailed, we will be seeing that there's a different different dimensions in in actually Europe and North America due to the mentioned kind of change with our main main customer's corporate transaction. Let's look at then kind of a bit reasoning underneath.

Where we when we have been kind of going through the numbers, we can definitely see the kind of improved profitability on half-year level. First half, we were able to improve our adjusted EBITDA to 9.5%, which was due to this product and customer mix as well as then this cost-disciplined overall within kind of our both businesses.

When we think about our net result for the period, particularly second quarter was €1.4 million and improving from last year €300,000 quite quite significantly. Here the key reason actually was of of of course then kind of coming from financial items with where we didn't have such a financial foreign exchange impact like we had last year.

This was particularly explaining this improvement. Our EPS was €0.07, showing quite nice improvement compared to last year.

Then when we look at the full half-year, it was €0.15 compared to last year €0.06. That's basically from our profitability.

Cash flow from operations was €2.4 million, and it was below last year level when we have been securing with our inventory our our kind of second half half deliveries as well as then we have been kind of preparing for component availability, which has been a bit tighter during this this year than last year. Our order book was €115 million, and it was about the same level than year-end.

That's pretty much on that one. When we look at our segment business segments, we can see here that Networks, which is the upper part of the table, there our second quarter was showing I would say that this €25.6 million was actually best quarter for order in- intake since the beginning of 2023, which is quite a nice improvement, and particularly it was coming from Europe when we have been deep diving the numbers.

Overall, I would say that in Networks, we have been able to show show kind of quite nice and profitability. We have been even though there has been some fluctuations, we have been able to keep keep it on a decent level even though there have been these changes in our our kind of customer orders for and deliveries.

On Public Safety and Mobility side, there we can see that our net sales was improving quite nicely, and it was mainly coming from our public transport operators, and considering kind of the level, it was actually I would say that one of the best ones for since since kind of recent years as well. When we go down to the adjusted EBIT on second quarter, €1.2 million, so that was actually the best quarter what we have been kind of then reporting for this segment on adjusted EBIT level.

As mentioned, though so the orders were slightly were were below during this quarter, but that's typical for our project-based business. We will be then kind of following that up in coming coming kind of quarters to come.

Then when we move on, here we can see Networks in a graph. Here you can see a bit better different trends from since 2000 2024.

Here when we look at this kind of order intake, specifically this Europe DOCSIS 4.0 technology was the one where we saw the kind of significant kind of orders coming in as well as then from integrated video systems and distributed access architecture. Particularly this this kind of quarter was driven by the great performance from Europe.

On net sales, there our year-on-year kind of numbers look a bit decline compared last year. Here it was primarily due to the kind of our traditional broadband networks product deliveris- deliveries, and our DOCSIS 4.0 and video business products were actually continuing to grow in Europe.

There's a bit mix mix kind of between these product products which we have been kind of then deliver- delivering from Networks. As mentioned, in North America, due to this kind of our main customer corporate transaction and then also certain kind of strong deliveries previous year, we we were then having a bit lower part of our geographical mix going to the North America, but it was then also backed up by strong European deliveries.

Cumulative adjusted EBIT was showing growth trend here as well for Networks side as it was in group group level. Here we can see that this cumulative trend is now kind of quite nicely following kind of previous quarter years and quarters development.

When we look at kind of Public Safety and Mobility, here we can see the same in graphs. When we look at our order intake, here we had actually previous year certain projects which were we were able to kind of have first first second quarter in 2025, and then there was also certain Middle East conflict which has been impacting to our order intake a bit.

I mentioned already that our kind of net sales was particularly strong in public transport operators compared to previous comparison period. Then also we continued to have nice nicely kind of improving profitability on cumulative adjusted EBIT, we have been able to able to show show kind of nice nice kind of development due to good product product and customer mix as as well as then kind of disciplined cost cost management.

Let's then look at our balance sheet. When we look at our balance sheet, we have here nicely kind of then improving equity, which is due to improving profitability.

When we look at our numbers, here we can see that our intangibles have been growing due to the R&D investments, particularly to North America product portfolio. Then here we can see as well the inventory is growing compared to last year due to the preparations for the rest of the year deliveries as well as then preparing for our kind of tightening component situation.

We want to secure that we have we have components in place kind of overall even though there is some some kind of challenges overall which is which are well well known kind of for the industry. Our cash and unused credit facilities were €20.4 million, in that sense pretty good good kind of situation as such.

Let's then move on to the cash flow in more detail. Our cash flow from operating activities during January-June was €800k, and this is kind of particularly showing also that our kind of networking capital has been tying tying kind of now us a bit more than kind of last year.

Also in addition to these kind of component supply environment, we also had a bit higher personal-related payments outgoing during first half. Then kind of when we look at our investment activities, those are particularly R&D investments and as mentioned, majority are then kind of related to North America product portfolio readiness.

On financial activities, you can see here changes what we are showing. Cash flow from financing was €2.4 million, and there we have been kind of paying out according to our loan agreement our bank loans, and then also at the same time, we have been drawing up certain kind of short-term credit facilities.

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Let's then kind of move on. Here we can see return on capital employed it reached 10.3% kind of in the end of June '26, and our equity ratio was 47.1%, showing nice improvement.

I would say that the last but not least, our net gearing was 37.7%. When we look at our interest-bearing net debt to adjusted EBITDA, it was 1.9 9 times.

Overall kind of our balance sheet has been kind of getting healthier, and I would say that kind of showing kind of improvement on kind of our capabilities also to manage our loans. That's pretty much what I wanted to briefly also share from financials.

Let's go back to Esa.

Thank you, Mervi. Now we have some time here for questions if there are any questions from the audience, we are more than ready to answer.

Atte, yes, please, go ahead.

Hi. Maybe we could start with the situation in North America for Networks, and I think the Charter-Cox merger was accepted by California authorities yesterday.

What kind of visibility do you have on the situation that when you are expecting the Cox orders to start again improve?

It's a good question. The deal closing has taken more than a year, and there has been quite some uncertainty, at least from our viewpoint, as to when the final closing will happen.

Now as we understand it, this California voting was the last pending major closing condition. Now obviously Charter will make their own announcements as to the closing of that transaction in due course.

Their playbook has not been communicated, obviously not yet, because their merger integration can actually only start now after their deal itself has been closed. We are expecting the situation to improve in the sense that, as we have communicated quite openly, the investments on Cox Communications side have been quite low given that they've been optimizing their inventories and optimizing their spend.

Charter, on the other hand, has made publicly announcements that they are intending to accelerate the rollouts in the Cox territories after the closing. This is the public statement that we are basing our assumptions on as well, and we are expecting investments to restart on the higher spend level in Cox territories probably towards the end of the year.

That would be maybe my best estimation at the moment.

Okay. If we think the development in North America excluding Cox, how are the other customers developing?

We have a good and positive momentum in North America at the moment. We announced last year Rogers, which is the largest Canadian operator, as our customer.

I mentioned in our previous quarterly call that they have some legacy inventory that they are still consuming prior to new orders or significant new orders. We did ship some amplifiers to Rogers during the second quarter.

They still have some old inventory, and again I'm expecting the ordering increase towards the end of the year. With some of the other Tier 2, Tier 3 operators, we have existing rollouts ongoing, and we have many field trials and customer testings ongoing as we speak.

Again, we're expecting those to translate into orders later this year. I guess you can sense the trend in my voice, which is that we're expecting an acceleration of orders happening towards the latter part of this second half.

Maybe third quarter will still be a little bit quieter, but then towards the fourth quarter we're expecting things to accelerate.

All right. Then the European market, you mentioned that now Q2 was very very good, was it exceptional or are you expecting good demand also in the coming quarters?

The development in Europe over the past quarters has been already very positive. I think we saw kind of dip in the market, but now what we have started to see, probably already from kind of last year, is that partially it is to do with the DOCSIS 4 technology availability for Europe, partially it is to do with certain compelling pressure to continue CapEx investments into their networks, and maybe thirdly to do with the cost of fiber deployment, which has made DOCSIS deployments significantly cheaper and much more viable option financially to increase your network speeds and also to improve the network reliability.

We are actually seeing orders coming in from many operators in many different countries. Our position in Europe is extremely strong.

We feel we have been winning share from many of our competitors, and we are definitely leveraging this leading position we have in the market now. I don't think it is a one-off quarter at all.

I'm expecting a positive trend to continue in Europe now.

Good. You announced a new cooperation with Vecima in Europe.

Can you open up that a little bit more?

We issued a press release related to our collaboration in Europe with Vecima, and basically this collaboration is about being able to offer end-to-end distributed access architecture solutions to European operators covering both the so-called core network components as well as the outside plant or field nodes. Basically what it means is that with selected customers in Europe, Teleste will be reselling Vecima's vCMTS core solution as part of our overall distributed access portfolio.

First customer deals are already in the pipeline in Europe.

Interesting. Then about the Mexico facility, how is the ramping up of production going there?

We started producing our ICON amplifiers in Mexico already during the first quarter of this year, and now in the second quarter, we have started then more meaningful customer shipments. Our main customer, Cox Communications, has now also received their first amplifier deliveries from our Mexican factory already.

There was certain factory approval process that we have gone through with some of the customers, and now we're essentially good to go. From now on, we're expecting to ship majority of our North America products, especially amplifiers, from our Mexico factory.

The quality is good.

Right. Good.

About the component prices, we know that they have been increasing quite much this year. Has that already impacted your delivery capabilities or are you still able to get all the components you want?

Other part of the question is about, is that price hikes already affecting your margins?

It is certainly a very relevant question as well. I guess this component shortage and the price inflation it means mainly two things to us.

The first thing is that we need to spend now much more effort in protecting our gross margin both upstream and downstream, meaning that we need to push back on our suppliers when they are then indicating pricing increases, and then also in some cases with our customers, we need to renegotiate the pricing and have been successfully doing so. The second thing is that we need to buffer more material, and Mervi was referring to that.

You have seen and you will see an increased level of inventories because we need to buffer components and material well ahead of time. Lead times are longer.

In some cases, we have needed to start even small redesigns of our products. When certain components are simply not available, we have needed to make some what I would say minor adjustments to our products in order to be able to secure supply.

Okay. Then about the Public Safety and Mobility, there was some impact on your orders from the Middle East situation.

Can you give any number that is meaningful?

Yes. We commented that at a relatively generic level.

Middle East is one of the reasons why the order intake was a bit lower. It's not the only reason.

I would say the main reason for a little bit lower quarterly order intake was simply to do with the timing of certain contract awards. We have a lot of activity and engagement.

We have many very exciting deals in the pipeline, but we have simply not yet been able to bring them to a closure and hence been able to announce them or to show them in our order book. We are expecting good order intake flow in the second half of this year.

Middle East has been meaningful. Yes, we have some customers in Middle East, especially for our video security products, where the projects that we had planned already for this year have been completely on hold now due to the war situation in the region, and we are not expecting them to progress before the situation there restabilizes again.

Can you give a little bit more color on those new contracts that you are expecting in H2? Are those coming from your existing customers or is there some new big customers coming in?

Most of them are coming from existing customers with whom we already have frame agreements in place. We are expecting good order intake from our existing rail car manufacturers, but we are also expecting orders from partially old and new public transport operators.

We have been focusing quite a bit lately on the public transport operator segment because increasingly it's the operators that are dictating the entire public transport IT infrastructure spend, including the trains. The fact that we are close to the operators also helps us to a little bit get ahead of the curve as to what is needed for the on-board environment with the trains as well.

This increased engagement directly with the public transport operators is now starting to translate into orders. We announced some of those already earlier this year, and we are expecting new orders to flow in.

We will hopefully be able to announce some of those relatively soon, but certainly during the second half.

All right. Maybe last question about the profitability of Public Safety and Mobility.

8% is on one quarter you already did 9% EBIT, but now 8% is already pretty good compared to history. Are you expecting that there's still have room to improve in the long term compared to that, or is this on an annual level would you be satisfied with a 8% margin on that business?

I guess the best answer I can give to that is that we have given the long-term target for our growth and profitability until 2030, where we are expecting, first of all, both of the business segments to grow about 10% annually on average. Then we're expecting the operating profit of the group to be between 7 and 12%.

Given that we have some corporate-level costs to carry as well, we are expecting both of the segments to then deliver even higher than that. I wouldn't say that we are satisfied with the profitability of either of the segments as they are today.

We've been able to get to what I would say is a very good position where both of the segments are now delivering solid profitability, but we are expecting and working on improving the profitability in both of those businesses.

Maybe just add on top of that one, let's also keep in mind that kind of there can be different type of quarters, as we all know. Definitely kind of we are working on to make sure that kind of profitability is on good level and improving also.

Thanks.

That's all from me.

Thank you, Atte. Okay.

Other questions? Kimmo, go ahead.

Okay. Thank you.

Atte had some great questions, maybe a couple of also from my behalf. On the European demand that you flagged that it has been very good in the Networks business.

Has this come as a surprise to you or was this something visible already early in the year?

Thank you, Kimmo. I a little bit commented that already.

We've started to see kind of more activity in the customer front already I would say for the past almost a year or so, and the first DOCSIS 4 shipments already started about a year ago. It's not a complete surprise, but I think it has been very positive recognition to see that many customers now across many of the countries, not just some of these key countries where we know that DOCSIS investments are being made, notably in the Netherlands, Belgium, Switzerland, these are the kind of core countries where we have the highest cable penetration and we know that investments are coming from those.

Now we are seeing orders coming in from Eastern Europe, Scandinavia, Germany, many other parts as well. I think the breadth of investments given the broad customer base we have there, that has been very nice to note.

Okay. Thank you.

Then about a little bit up on the ambition levels. You now got €25.6 million of new orders in one quarter.

Do you expecting this to go up? I guess the Q4 is usually the highest, but what kind of ambition levels do you have?

What would be the best outcome for you to receive new orders? Or this kind of realistic target for you to receive in one quarter?

It's probably difficult to put a number on a quarterly order intake, especially as some of the orders may be one-off orders which then are landing in one quarter and they may be more sizable. Some of the deals and some of the contracts and orders we get from our train manufacturers, for example, they can be €10 to €20 million at a time, they are always swinging the order intake.

Then also similarly from our Networks customers, we can sometimes get a €10 million bulk order, and then next quarter is quieter. You will continue to see quarterly fluctuation in the orders, but you can probably sense a certain positive tone also when it comes to Public Safety and Mobility regarding the second half.

We have some very interesting and exciting deals in the finalization phase at the moment, and then when those land, they can quite significantly positively impact certain quarters. On average, I would say that we stick to our 2030 growth target, and that basically then means that you should have roughly 1.1 book-to-bill ratio every year on average, I guess, if you go to that direction.

Yes. Okay.

Yes. Then on the Rogers volumes on North America, how has this been as planned or is it fluctuation between the quarters or is it going linear up or how is it going?

Rogers, we did expect more this year, it's fair to say. When the deal was closed with them, their own forecasts for 20 26 were higher than what we have seen now.

They announced to us earlier this year—I think I mentioned it already after the second the first quarter announcements—that they informed us that they have discovered excess inventory that they want to consume before they order more. We are not probably expecting to get as many orders from them this year as we initially expected.

The good news is that they are not going to anyone else either. They simply are consuming their legacy inventory from their warehouses, and '27 then should be back in line with the earlier projections.

Okay. Okay.

Thanks. Then on the Charter, I think we discussed this also in the Q1 earnings release, the line losses are quite huge which they're suffering at the moment.

In the internet side, is the network quality poor or why is the trend is getting harder and harder for them? What's your view on the case?

I need to be careful with public statements.

This is not Charter's

earnings call, but if you listen to what they say, they are referring to heavy competition, not necessarily competition coming from fiber, but competition coming, for example, from 5G fixed wireless broadband connectivity, where the kind of subscription prices can be lower than for more high quality DOCSIS connections. Some customers are turning to 5G wireless broadband connections.

That's probably the biggest churn I can see from their statements. No, I think the network quality, obviously the fact that they are now have planned and as have started the major DOCSIS 4 rollout in their network means that they want to improve the network speeds, but also the reliability of the network.

I don't want to make any comments about their network reliability today. I'm sure they are very high quality operator.

Obviously DOCSIS 4 and the related network analytics tools and the intelligence and the telemetry will give them a lot of new tools to be able to manage the reliability and the quality of the service in their network.

Okay. Thank you.

I don't have any further questions.

Thank you very much. Any other questions from others before we close the call?

If not, then we thank you for your time and interest today, and we will reconvene latest in 3 months' time with the Q3 earnings release. Thank you for joining today.

Thank you for joining.

Thank you.

Bye-bye.