Good morning. Welcome to MSAB's Q3 earnings call.

My name is Kim Sjölund, CMO at MSAB, and this morning the presentation will be done by Peter Gille, our CEO, and by Tony Forsgren, our CFO. Without further ado, I am going to share my presentation.

Handing over to you, Peter.

Okay. Good morning, everybody, and welcome to the Q3 report presentation.

This was a really good quarter. Actually, it was the best quarter in the MSAB history, both in terms of revenue and in terms of EBIT.

We're really happy to present that, of course. Sales was a growth with approximately 17.6%, if you look on currency adjusted.

The growth was about 57%. It's really a great growth that shows also the scalability in the whole model that we have.

If we sell enough, it will really look a lot better. We have also managed to keep the gross margin relatively high at 95%, and you can also see a similar growth than in the annual contract value as the overall growth.

It grows with about 16%. If we look on the different regions, we do a really good quarter in EMEA, part of it driven by a big deal with the defense industry, but also we see an underlying growth overall in the market.

In the emerging markets, we see a lot of potential and also high growth in those areas, while it's more moderate growth in the more mature markets as the Western Europe then. APAC continues to grow.

It's one of our focus areas, and we continue to grow in that area quite rapidly. In Japan, we are seeing the adoption become higher and higher.

We also see that India is interesting. Australia, we did some really good business.

It's moving all over in that market, I would say. We see also going forward that we will continue to grow in that market.

In US, it looks like we are on par with last year, but my belief is that we are also growing in the US market and that we will see that in Q4. We had one big deal that was delayed into Q4 that normally comes in Q3.

I think we will see that we are growing also in the US now. Things has become a little bit more quiet.

People are starting to find their roles. The organizations are starting to work again.

That's a really positive sign. In addition to that, we also see that Latin America, where we have hired some sales capacity, has a big potential, and we think we will see that going forward also, maybe not so much in next quarter, but in the next year.

Overall, it's XRY Pro that really drives the demand in the market. The reason for this growth is really the product investments that they have been doing now since a long time, but they continue to drive the growth.

It means also that we will continue to do investments. It's important for us to have a premium product like XRY Pro being on top all the time, and to do that, we will continue to increase the investments in our product, both in the iOS space and in the Android space.

Another thing that is really good to see is that there are not a lot of analysts that works in this quite limited market, but one of them is IDC, and they have now also named us part of their leaders quadrant or leaders model. That is also good to see.

We together with Cellebrite and Magnet is considered being leaders in this industry. It's good to get that recognition for us as well.

The strategy that we have has so far proven to be successful, we continue to execute on that strategy. With that strategy, it means that we invest in the product, we make the company work in ways so the processes works well, we have the numbers that we can work with to analyze the outcome that we had, and we are continuing to invest both in people and in the product.

That is what we will continue to do to keep the momentum in the company. With that, I leave the word to Tony for talking about the numbers.

Thank you, Peter. As mentioned, we continue to grow.

Net sales in Q3 reached 175 million SEK. That is up 19.4% compared with Q3 last year.

Growth adjusted for currency, the growth was 17.6%. At the rolling 12 months sales, we reached 539 million SEK to be compared with 430 million SEK a year earlier, an increase of 23% and 100 million SEK.

The growth varies across regions. APAC grew 90% from a lower base, but anyhow a good growth.

EMEA, they grew by 24%, while Americas declined by 4% in the quarter. However, we know there was a big deal last year that we didn't have this quarter this year.

EMEA remains our largest region, accounting for approximately 55% of the sales, whereas Americas account for 31 and APAC 15%. New sales, which is important for us, that brings in new business and new customers, grew to 56% compared with 43% in the comparison period.

Renewals account for 44%. That is driven by new markets and our sales in XRY Pro.

That's the main drivers of the growth we see at the moment. Currency effect contributed approximately with 3 million SEK positively during the quarter.

To complement the quarterly revenue, we use the new measurement ACV to look at the development of the underlying software base. Our active contract value amounted to 460 million SEK in September 2026.

This represent a growth of 16% compared with September last year, when ACV was 398 million SEK. The product mix, pricing, new sales drive this development, and XRY Pro remains our major contributor, and our churn is still very low.

As mentioned before, ACV shows the underlying growth in the software base, and revenue also depends on when we recognize the revenue from the contracts. The ACV growth should therefore not be compared directly with revenue growth, since the adjusted comparative figures cover licensed products.

Let us now have a look at how sales translates into profitability. The quarter demonstrates the scalability of our business.

Gross margin was 95%, and EBIT reached 72 million SEK. The left-hand chart shows that gross margin also remains high on a rolling 12-month basis.

It amounted to 94.9%. In the right-hand chart, EBIT increases from 45.8 million in Q3 last year to 72 million this quarter.

Rolling 12-month EBIT is approximately at a level of 118 million SEK for the moment. Higher sales do not lead to direct corresponding increase in our costs, as mentioned before.

We have, as we see, a scalable business model, and at the same time, we continue to invest in our products and people. An important qualification is also that this quarter has temporary cost reductions.

It's holiday seasons and a lower level during the summer period, and a reversal of accrued holiday pay reduced the cost level in Q3, which is also has made in previous years. With that said, our current operating cost run rate is approximately 35 35 million SEK per month.

That is to be expected for the future quarters then. Let's have a look at the last slide.

Strong sales also show through in cash flow and in our balance sheet. We still have a stable financial platform.

Cash stood at 147 million SEK the last of September this year to be compared with 86 million SEK a year earlier. Equity increases to 203 million SEK from 128 million SEK last year.

Record sales has contributed and improved our cash flow. Total assets is up due to the investments we made and the lease contracts in the headquarters in Stockholm.

It increased to 438 million SEK from 282. Other short-term and non-interest-bearing liabilities total 274 million SEK, and growth increases both in equity and short-term liabilities, and we recognize revenue as we fulfill our contracts.

Okay.

To sum it up, we have what we think is a good strategy, and it also shows off in the numbers. We will continue to work according to that strategy.

However, the quarters, now we have had really good quarters for quite a long time, but they are always big deals and volatility that can affect the quarters. We will we want to warn for that going forward.

We we focus on the markets where we have the the biggest potential, which is the emerging markets and the defense markets, really. We are also growing quite rapidly in the more mature markets.

What we do is to invest in the product. We have loyal customers, and we are a European company, which is important in this industry, that you can trust this company and the owners behind it.

We are a public noted company, it's easy to to see who the owners are. We think that is a good recipe for having some good success also going forward.

We are really positive towards Q4 and also the the next year. With that, I want to thank you all and hand over to the questions, which we have some some questions, I think.

We do.

Yeah.

We have some questions from Hugo Lisjö here. You've delivered a strong growth in 2026 and maintained your financial targets, suggesting you expect growth to remain strong going forward.

My question is therefore more about margins and anticipated increase in opex related to product investments. Should we expect these investments to limit operating leverage in 2027, resulting in a flat EBIT margin, or could the higher cost base actually lead to a lower EBIT margin despite continued revenue growth?

We start with that one.

We can help each other out with that one. We will continue to invest.

We see the need for investment. It's really important for our customers to keep everything on top.

We see also need of investment in people, both in sales and in product development. However, with AI, we think we can be more efficient in that area going forward.

However, those investment, we don't see that we will decrease the EBIT margin. That's not our view at the moment.

Tony?

That's correct. We'll see a mix of both capex and opex going forward, but in a controlled manner as previously.

Yeah. Maybe that the scalability will not be as good, but the,

yeah. We will still keep on investing for the long term and the future, not looking quarter by quarter.

Next question then: How far have you progressed in migrating existing customers from the legacy XRY product to XRY Pro? Are we talking about approximately 20% of the customer base having converted, or is the figure closer to 50%?

No, it's closer to 20%. We have a few years left to be where we think we have addressed our customer base, our present, but we're getting new customers as well, we are at the start still.

Next question: What is the price difference between the legacy XRY product and XRY Pro? How much of an uplift do you typically achieve when customers upgrade?

It's approximately 4x pricing for the Pro version versus the Logical Physical. If you look at our license base, we still have a lot of Logical Physical, but we are achieving and approving in the Pro base as well.

But 4x.

Next question: Which products are you primarily investing in? Is the focus on further strengthening XRY Pro, potentially creating room for additional price increases, or are you also investing in other products across the portfolio with the ambition of driving similar upgrades to higher-priced offerings?

Both. We are investing in XRY Pro, not maybe to increase pricing, even though we will continue to increase pricing, but to keep it being a premium product.

This market is always moving, you have to always invest in having the latest, you can come into the latest phone models. In addition to that, we also see potential for some additional software.

We are looking at a software for the front line. Today we have a front-line solution based on computers, but we also think that a lighter front line might be very interesting for our customers.

That's an additional investment that we are looking at as well.

Last question then from Hugo is: Are you actively exploring complementary acquisitions, or how do you intend to deploy your strong balance sheet going forward?

Yes. I think that as a company, we are now ready for acquisitions.

We have everything in order. We need to find the right ones.

We will not do acquisitions just because we want to grow or do acquisitions. We really want to find the right acquisition, and this is a niche market.

It's difficult to find the right ones, but we are more actively looking at acquisitions. If we're going to use the cash, it's for investments or acquisitions.

That's my view, at least.

Those were the questions we had. Any additional questions from anyone else?

Yes, let's see here. Rasmus Engberg: From the CMD in May, my takeaway was that you were investing during 2026 and would start to scale on the EBIT margin from 2027 and onwards.

Today you still see scalable EBIT margins, but talk about heavier investments than you did back in May. What has changed in the last 5 to 6 months?

Yeah. Nothing has really changed, but the investments that we thought we would do in Q3 and Q4 already in 2026 has been delayed.

They are a little bit later than expected, those investments. Also for '27, we also see then this additional product need in the market that might address the '28 business that we also want to invest in.

Maybe that's what have changed.

Okay. Question from Anders Öskersson: MSAB delivered strong growth in Q3, while Cellebrite appears to be facing a more challenging environment.

You've also highlighted that governance, transparency, and data sovereignty are becoming increasingly important for customers' purchasing decisions. Are you seeing tangible evidence that these factors are giving MSAB a competitive advantage and helping you win market share from Cellebrite?

Difficult question. Cellebrite had a difficult Q2.

We haven't seen the Q3 results yet. However, in Q2, they also forecasted that they will have a lower business over the year than expected.

I think that is mainly driven by the US problems that we have had earlier on that they somehow has been hit by that later than we got hit by that. I think that's mostly the reason for Cellebrite's problems.

I should not talk too much about Cellebrite, because I don't have any insight into that. The main reason that we are winning market share from Cellebrite is that we really have a better product in some aspects, and in some aspects also has a better price.

I don't think our customers in general look at the kind of ethical perspective. They want to buy a product from a company that they can trust, but I think Cellebrite is considered to be a trusted company today.

They are a US company and even though they do most of development in Israel, then. Of course, with Oxygen being wiped out from the market basically because they did some tricky things, I think that will benefit us more.

Another question: Have you seen further interest from military customers on the back of the deal you got in early September?

We continue to see interest from military customers, maybe not because of that deal, even though I think it affects the interest also, but there are long cycles, I wouldn't expect any big deals coming next quarter, but in the long run, I think we will see a good business in the military sector.

That appears to be all of the questions for the moment. At that, I think thank you very much for joining us for this earnings call, and enjoy the rest of your day.

Thank you.

Thank you. Thank you.