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Introduction & Market Context
MilDef Group AB (STO:MILDEF) presented its third quarter 2025 results on October 23, showcasing record-breaking performance in both sales and order intake. Despite the impressive financial metrics, the company’s stock fell 3.85% to 192.5 SEK during early trading following the presentation, reflecting investor concerns about negative free cash flow and potential delivery challenges ahead.
The tactical IT solutions provider continues to benefit from increased defense spending across Europe and globally, positioning itself as a key player in what it describes as a "defense tech supercycle." The presentation highlighted MilDef’s expansion strategy and multi-domain offerings across Army, Navy, and Air & Space sectors.
As shown in the company’s presentation cover, MilDef emphasized its doubled net sales, all-time high order intake, and focus on increasing delivery capacity:
Quarterly Performance Highlights
MilDef reported exceptional growth across key financial metrics for Q3 2025. Net sales reached 540 million SEK, representing a 116% increase year-over-year, while order intake surged 119% to 907 million SEK. The company’s adjusted EBITA grew by an impressive 172% to 84.6 million SEK.
The presentation highlighted several achievements for the quarter, including record-strong order backlog for 2026 (up 142%), successful delivery of orders moved from Q2, and multiple contract wins of strategic importance. The company also emphasized its ongoing capacity ramp-up across buildings, people, and processes.
These key financial figures and explanations were clearly presented in the company’s slides:
However, not all metrics were positive. Free cash flow turned negative at -53.1 million SEK, compared to a positive 42.6 million SEK in Q3 2024. According to the presentation, this was primarily due to inventory buildup for Q4 deliveries and increased accounts receivable from higher sales volumes.
The company’s growth trajectory is particularly evident in its order intake and backlog metrics, which demonstrate MilDef’s expanding market position:
Strategic Initiatives
MilDef’s presentation emphasized several strategic priorities driving its current and future growth. The company is focused on scaling up capacity, climbing the value chain, targeted geographic expansion, and building organizational resilience.
The acquisition of German company Roda continues to play a significant role in MilDef’s growth strategy. The presentation noted that Roda delivered solid Q3 figures with strong order intake, including its largest call-off order with Bundeswehr worth 212 million SEK. This acquisition strengthens MilDef’s position in the German market, which is particularly significant given Germany’s announced defense ramp-up of 500 billion EUR over the next 12 years.
The company’s strategic growth priorities were outlined in detail:
MilDef’s geographic footprint continues to evolve, with Europe (excluding Nordics) now representing 38% of sales, an increase of 15 percentage points. The Nordics region accounts for 49% of sales (down 10 percentage points), while North America represents 8% (down 7 percentage points). This shift reflects the company’s strategic focus on European defense markets.
Detailed Financial Analysis
MilDef’s order backlog reached 3.5 billion SEK, representing a 116% increase year-over-year. The backlog duration extends well beyond 2027, providing strong visibility for future revenues. The presentation broke down the backlog by year, showing significant growth across all time periods compared to Q3 2024.
The company’s gross margin development shows a slight decline in Q3 2025 to 47.6%, down from 48.9% in Q2 2025. However, the long-term trend remains positive compared to 2023 and early 2024 levels. This slight margin pressure could be one factor contributing to investor concerns despite the strong top-line growth.
Adjusted EBITA on a last twelve months (LTM) basis showed strong improvement, reaching 196.5 million SEK in Q3 2025, a 50% increase from 130.7 million SEK in Q3 2024. This demonstrates MilDef’s ability to translate revenue growth into improved profitability.
Forward-Looking Statements
MilDef’s presentation painted an optimistic picture for future growth, based on three key factors: a high-demand landscape expected to remain strong for over 10 years, ongoing digitalization and connectivity trends in defense technology, and the company’s established position as a trusted supplier in the defense domain.
The company’s order backlog provides strong visibility for deliveries through 2026 and beyond, with significant growth in orders scheduled for delivery in 2026 (1,446 million SEK) compared to the previous year. This backlog supports MilDef’s confidence in continued growth, though the company will need to address capacity constraints to ensure timely deliveries.
Analyst Perspectives
Despite MilDef’s impressive growth metrics, the market reaction was negative, with the stock dropping 3.85% following the presentation. This disconnect likely stems from concerns about the company’s negative free cash flow, potential delivery challenges, and questions about sustainable margins amid rapid expansion.
According to the earnings call transcript, analysts raised questions about the company’s capacity expansion strategy and its impact on future growth. While executives clarified their plans for scaling up production facilities, investor concerns about execution risks remain.
The stock’s decline may also reflect its strong performance over the past year (up 109%) and current valuation levels. According to InvestingPro data mentioned in the earnings article, the stock appears overvalued at current levels, trading at an EV/EBITDA multiple of 57.16x.
As MilDef continues its ambitious growth trajectory, investors will closely monitor the company’s ability to maintain margins while scaling operations, improve cash flow generation, and successfully integrate acquisitions like Roda to deliver on its long-term growth potential in the expanding defense technology market.
Full presentation:
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