SECTRA (SECT) Q1 25/26 earnings summary

Executive summary

• Order bookings more than doubled year-over-year, driven by strong SaaS and service-based sales in the US and Canada, with all operating areas showing growth and significant new contracts in medical IT and cybersecurity.

• Transition to a pay-for-usage as-a-service model is well advanced, with recurring revenue now a major component of total revenue.

• Customer satisfaction remains high, supporting continued growth, especially in North America.

• Major contracts, including a $227M US deal, NHS Scotland, Quebec, and a five-year USD 21 million cloud imaging contract, will ramp up gradually over several years.

• Net sales rose 5.8% to SEK 765.9 million, with recurring revenue up 13.9% and cloud recurring revenue up 46.1% year-over-year.

Financial highlights

• Contracted order intake doubled year-on-year to SEK 1,309.5 million, confirming high demand in medical IT and cybersecurity.

• Net sales increased 5.8% year-on-year to SEK 765.9 million; currency-adjusted growth was 12.1%.

• Recurring revenue rose 13.9% year-on-year to SEK 549.2 million, now representing 72% of total revenue; cloud recurring revenue grew 46.1% to SEK 179.4 million.

• Operating profit rose 19% to SEK 118.8 million, with a margin of 15.5%.

• Cash balance at quarter-end was SEK 1,426.5 million.

Outlook and guidance

• Large contracts will begin generating revenue this fiscal year, but significant impact will be gradual over 7 years, with full ramp-up taking 2–3 years.

• Transition to service and cloud-based sales is expected to drive stable, long-term recurring revenue growth, though short-term margins may be impacted.

• Secure Communications expects delayed deliveries to impact results toward the end of this fiscal year and into next.

• Increased investment in resilience and security in NATO countries is anticipated to create long-term opportunities.