Modulight Oyj (MODU) Earnings Call Transcript & Summary

Welcome to Modulight's Q2 webinar. My name is Seppo Orsila. And as usual, I'm here with our CFO, Mrs. Guina.

Hello, everybody.

So I'll again give a short wrap about what we are, what has been done. Anca will cover the financials. Then I have some good news about the R&D pipeline, and then I'll recap the outlook that remains unchanged before summarizing, and then we'll take all your questions as usual. So we are a life science company that fights cancer with science and technology. We have ample scientific evidence of that in the most prestigious journals with the leading cancer researchers in the world. We also sell the same laser technology to other high value-add applications, including flow cytometry, microscopy, semiconductor, quantum and defense. Also on this sector, we have made some progress during the summer. Here are some pictures from the recent therapies. And I guess the highlight of the month clearly was the -- one of the trials or Phase III trial, to be more specific, completing its patient recruitment. This obviously means that now we have started a so-called follow-up period, and we will be following the condition of those patients in the Phase III trial. This will last about a year. After that, we can make conclusions and then there will be discussions with the FDA based on the results. And overall, the pipeline is progressing on many fronts. We have 36 projects as in the end of last quarter, a little bit more than a year ago. But I think quite importantly, we made progress in several areas. Also progress in some of the projects outside the life science space. I'm going to talk about those a little bit later. But I think, for example, it's worth mentioning that one of the largest semiconductor players in the world, we have a couple of them as customers, but they gave us a formal approval to be a supplier. Also with them, we have worked on a number of different prototypes to a number of different instruments in their portfolio. EBITDA improved significantly, and we continued the positive trend started last year. We increased, kind of, customer activity and during the summer and before and after, we actually continue to have several high-level visits from the customers, which we always felt as a good sign. And I think Anca also felt that order collection-wise, things were good during the summertime. So cost savings continue to improve our productivity, but I also want to talk specifically about the platform thing where we have been, kind of, investing heavily since 2022, and now we are seeing the results in many ways. Revenue, 1.6, slightly down, but I think within our expectation, as projects are maturing and there's going to be this, kind of, let's say, low phases, but we retain our outlook with intent to grow also this year. Free cash flow from operations improving slightly as well. But Anca, if you cover the money side a little bit more in detail.

Sure. My pleasure. So in Q2, the PPT business continued the triple-digit growth and now is generating more revenue than we would have produced with the previous business model. We revised the pricing structure and updated the agreements with the customers to introduce a higher degree of stability -- long-term stability into the contractual structure, which is very important for us as the business matures and the treatments are approved. And by revising pricing, I don't mean that we decrease the prices, but on contrary, we did increase, like, monthly fees and treatment prices basically. The revenue declined by 18%, partly due to project delays and rescheduling of some of the deliveries, but also due to the growing number of early-stage prototypes we deliver to large customers with mass production price. We consider that this business approach is justified because of the short- and long-term potential. Profitability improved also this quarter, as I already mentioned, and remained positive despite the decrease in other revenues. EBITDA percent was 2.3%, which corresponds to an increase of EBITDA of 185% from Q2 2025. This improvement was driven by better margin structure for certain products and increased operational efficiency. Special thanks for this has to go to our technical team who, over the years, developed our laser platform so that it would require a minimum amount of configuration per customer. Also, the diversification of our customer base, along with the progress of growing number of projects supported this development of the profitability, but at the same time, it increased the cost. Modulight product platform is suitable for an increasing number of customers, while the amount of configuration required is decreasing. Our financial performance evolution, together with the feedback we received from our customers and the relationships we developed with our customers over the year, prove the versatility of our product platform and the efficiency of our investments and once again confirm our view on the scalability of the business. The operating cash flow was -- in Q2 was EUR 22,000 versus minus EUR 478,000 in 2025. And the net cash flow was minus EUR 1.3 million versus minus EUR 2.2 million in 2025.

Yes. Maybe I'll just -- sorry, Anca, I make one additional comment. I think it was an excellent clarification when you talked about the revised pricing. And based on some investor relations feedback, we saw that people felt that this revised pricing means reduction. But as Anca said, it means price increases or how I would rather put it is that now that the product is more mature, it produces more value. It is more verified and thus, it is justified to have a higher price tag yet deliver more -- even more value to the customer. And this is, I think, something that you see in pharmaceuticals overall that when something is very uncertain, you use less money. But when things become a little bit more solid, you are obviously happy to pay more. And I think this is exactly same simple phenomenon that we're seeing here and expect to see also in the future. And thanks, Anca, for reminding this fantastic work that our engineers have done. I mean, technical team has worked very hard since the early 2022 to improve the product platform configurability and applicability. And frankly speaking, even we don't have a slide on that, I mean, we could not possibly deliver all the prototypes and especially at a much higher quality than we are doing today to many of the leading companies in semiconductor, quantum and other industries in the world, not obviously not forgetting the pharmaceutical companies, if we have not managed to do the several years of work to invest into the platform, its configurability and flexibility. So this is really astonishing achievement, and that shows us reduced cost, but also in the number of units that we're able to ship. Yes, it's a little bit pity that we on the sales side have not been able to sell to the big companies, the prototypes at such a high price as we used to 5, 10 years back to start-ups. But on the other hand, I believe that things are now on a more solid basis. Yes. Thanks, Anca. Please continue.

Yes. So for H1, the PPT business grew again, and it was an increase of 137% than in first half of 2025. We see for this first half positive EBITDA of 12%. Despite of the decrease of 13% in the revenue, EBITDA percentage improved by 29% from H1 '25. There was also positive development in operating profit, EBIT and the result for H1 in '26. The importance of our vertically integrated manufacturing facility continues to increase. And together with the versatility of our technology platform, it's strengthening our competitive position in our markets. Operating cash flow was EUR 841,000 versus minus EUR 1.8 million in 2025. And the net cash flow was minus EUR 1.8 million versus minus EUR 5.1 million. Please. Yes. So here, you see a decrease in revenues and improved profitability for both quarter and half year periods. The headcount as full-time equivalent at the end of the period was 62 versus 70 in 2025. The objective of our updated strategy for period '26, '27 is strong annual growth and return to strong profitability. In addition, we aim to achieve positive cash flow by the end of the strategic period. We expect still quarterly fluctuations, but our diversified customer base and increased maturity of our projects give us confidence in growth over the strategic period.