SECTRA (SECT) Q2 25/26 earnings summary

Executive summary

• Achieved high order bookings and increased sales, with strong order intake in North America and Europe, and improved profitability driven by customer satisfaction and expanded commitments.

• Medical imaging IT and cybersecurity segments saw robust demand, with major new contracts and expanded agreements in key markets.

• Transition to an as-a-service and cloud-based model is progressing, with significant new product launches and large contracts in Sweden, the UK, and the US.

• Profit per share increased by 49% to 49.4%, and operating profit rose 47% to 46.8%, with a strengthened margin of 19%.

Financial highlights

• Net sales increased by 9.4% year-on-year to SEK 1,616.4 million, with recurring revenue up 18% and cloud recurring revenue up 61%.

• Contracted order bookings reached SEK 4.7 billion, down 2% year-on-year due to a large prior-year contract.

• Book-to-bill ratio stands at 2.6.

• Cash flow from operations was SEK 160 million, driven by profit growth but offset by increased receivables.

• Dividend paid in Q2, with equity/assets ratio at 51%.

Outlook and guidance

• Large contract go-lives and cloud transition will increase costs before revenue is recognized; significant revenue impact expected in the next fiscal year and beyond.

• External costs will continue to rise in the second half due to major go-lives.

• Margins may not remain at current high levels due to upfront cloud costs and ongoing investments.

• No plans to change the 15% operating margin target; focus remains on long-term EBIT per share growth.

• Product delivery delays in Secure Communications will negatively impact full-year results, with improvement expected next year.