Modelon (MODEL) Q2 2025 earnings summary

Executive summary

• Annual recurring revenue (ARR) grew 9% year-over-year to MSEK 55.5, driven by 28% growth in Modelon Impact, while net revenue declined 16% to MSEK 18.5 due to weaker service business and currency effects.

• Cost reduction initiatives and restructuring led to improved adjusted EBIT, with Q2 adjusted EBIT at MSEK -9.4, a MSEK 2.0 improvement over last year.

• New contracts were secured with clients in geothermal energy, heat pumps, waste-to-energy, motorsports, and building climate control, expanding the customer base.

• Integration of the LBNL open-source buildings library into Modelon Impact enhances competitiveness in the building simulation market.

• Agreement reached for a directed share issue to Briarwood Capital Partners, strengthening financial position and enabling further product and go-to-market investments.

Financial highlights

• Q2 net revenue was MSEK 18.5 (down 16% year-over-year); software revenue stable at MSEK 14.4; service revenue fell 46% to MSEK 4.0.

• Adjusted EBIT for Q2 was MSEK -9.4 (improved from -11.4); net profit was MSEK -14.6 (vs. -12.4); EPS SEK -0.85 (vs. -1.13).

• Cash balance at quarter-end was MSEK 49.3, up 23% year-over-year; cash flow from operations was MSEK -14.6, unchanged from last year.

• Operating expenses for Q2 were MSEK 33.2, including MSEK 5.2 in non-recurring restructuring costs.

• Development costs decreased 22% year-over-year to MSEK 10.5 in Q2.

Outlook and guidance

• Underlying demand for system simulations remains healthy, but customer investment delays, especially in North America, are expected to persist in H2 2025.

• Cost reduction measures are expected to generate annual savings of MSEK 15 from Q3 2025.

• Financial targets: software ARR growth above 20% and positive free cash flow by 2026; long-term EBIT margin target above 20%.