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Enea AB reported its third-quarter 2025 earnings, revealing a notable increase in earnings per share (EPS) but a decline in stock price. The company achieved an EPS of SEK 1.77, a significant rise from SEK 0.18 in the same quarter last year. The stock price fell by 10.22% in pre-market trading, reflecting investor concerns despite the strong financial performance. According to InvestingPro analysis, the company appears undervalued at current levels, with a perfect Piotroski Score of 9 indicating strong financial health.
Key Takeaways
- Enea’s EPS increased to SEK 1.77 from SEK 0.18 YoY.
- Revenue reached SEK 213 million, with a constant currency growth of 3%.
- Stock price dropped by 10.22% following the earnings release.
- Strong focus on security solutions and network intelligence.
- Full-year guidance remains unchanged, with an EBITDA margin target of 30-35%.
Company Performance
Enea demonstrated robust performance in Q3 2025, driven by its strategic focus on security solutions and network intelligence. The company’s net sales were SEK 213 million, showing a 3% growth in constant currency terms, despite a reported currency decline of 1.8% year-over-year. This performance underscores Enea’s resilience amid geopolitical uncertainties that are boosting demand for security solutions.
Financial Highlights
- Revenue: SEK 213 million, with a 3% constant currency growth YoY.
- Earnings per share: SEK 1.77, up from SEK 0.18 in Q3 last year.
- Adjusted EBITDA margin: 33%.
- Net debt: SEK 212 million.
- Cash flow: SEK 21 million.
- R&D investment: 25% of turnover.
Market Reaction
Despite the positive earnings report, Enea’s stock price fell by 10.22% in pre-market trading, closing at SEK 70.3. This decline could be attributed to investor concerns about the company’s future growth potential and the impact of geopolitical factors on its operations. The stock is currently trading closer to its 52-week low of SEK 62.1, indicating cautious market sentiment. InvestingPro data shows the company maintains a healthy debt-to-equity ratio of 0.17 and an impressive Altman Z-Score of 9.69, suggesting strong financial stability despite market concerns.
Outlook & Guidance
Enea maintained its full-year guidance, projecting stable to moderately positive market conditions. The company plans to focus on accelerated growth in its network and security segments, with an EBITDA margin target of 30-35%. A strategy update is expected in Q4 2025, emphasizing Enea’s commitment to innovation and market leadership. With a price-to-book ratio of 0.92 and strong free cash flow yield, InvestingPro analysis suggests the stock offers potential value for investors looking beyond short-term market volatility.
Executive Commentary
CEO Teemu Salmi highlighted the impact of geopolitical developments on security solution demand, stating, "We see the continued trend that the geopolitical developments are fueling the need for increased security solutions in communication." He also emphasized Enea’s commitment to innovation, saying, "We want to stay at the edge. We want to be relevant, and we want to make sure that our thought leadership is seen in different parts of the ecosystem out in the world."
Risks and Challenges
- Geopolitical uncertainties could impact demand for Enea’s products.
- Currency fluctuations may affect financial performance.
- High R&D investment could pressure margins if new products do not succeed.
- Competition in the security and network intelligence markets remains intense.
Q&A
During the earnings call, analysts questioned the impact of foreign exchange on cost improvements, which the company estimated at approximately SEK 5 million. Discussions also centered on organic growth challenges and the justification for high R&D investments as essential for maintaining relevance in the market. Enea reported a 9% growth in its network business, highlighting the sector’s potential.
Full transcript - Enea AB (ENEA) Q3 2025:
Conference Operator, Conference Call Moderator: Welcome to the Enea Q3 Presentation 2025. During the questions and answers session, participants are able to ask questions by dialing #KEY5 on their telephone keypad. Now, I will hand the conference over to the CEO, Teemu Salmi, and CFO, Ulf Stigberg. Please go ahead.
Teemu Salmi, CEO, Enea: Thank you so much, and good morning, everyone. This is Teemu Salmi speaking, CEO Enea. With me in the room, I have Ulf Stigberg, CFO as well. Today’s agenda is going to be very similar to the way we have presented the previous quarter since I joined Enea after Q1 this year. A short introduction and summary of the quarter. We will do a more deep dive into financial results, and then we will talk about way forward and our outlook as well at the end of the presentation. Obviously, there will be time for questions and answers as well at the end of the presentation.
Let’s get straight into it and talk about the key numbers of the third quarter, where we are reporting net sales of SEK 213 million, which in reported currency is a decrease of 1.8% from last year, but in constant currency is a growth of 3% year over year. Our margin is coming in at 33%. Our net debt is at SEK 212 million, and our cash flow coming in a little bit increased year over year at SEK 21 million. What I would say that we have spent quite a lot of time on the last two quarters is to clean up our balance sheet to ensure that the items that are impacting the financial net in our result are being handled.
The exposure from those has been taken down, and we can also see a clear improvement on our earnings per share with SEK 1.77 as a result in the quarter compared to SEK 0.18 in quarter three last year. We’re going to come back to these key numbers in depth when Ulf takes you through the financial summary as well. Last but not least, we continue to invest in R&D, which is the key fundament for making sure that Enea stays relevant and ahead of the curve and competitive on the market. 25% of our turnover is invested back into R&D. Some highlights from the market and business development in the quarter. I think that we see the continued trend that we reported in the second quarter as well, that the geopolitical developments are fueling the need of increased security solutions in communication.
That has not, it has accelerated, I would say, in the quarter. I’m going to come back shortly to tell you about a couple of incidents in the quarter that actually are also fueling the need for the Enea solutions. We also see a good continued momentum for our traffic management business. The need for increased network intelligence is there, and it’s accelerating as well. That’s good. Fundamentally, we see traffic management business continue to grow. In the short term, at least in this year, year to date, the continued strengthening of the Swedish krona with more than 16% stronger currency or exchange rate today compared to the beginning of the year is creating pressure on us when it comes to our top line.
I’m actually very pleased to say that we show 3% growth in constant currencies in the quarter, even though this strengthening of the currency is impacting our reported top line result. On the business side, we have a good underlying business, and we have also a good and solid pipeline, which gives us confidence that we are well positioned to reach our ambitions. We see also from a market point of view that the business in the Middle East and North America is developing well from a regional perspective. Those are also the regions where we made two press releases of new deals during the quarter for two different tier-one operators, respectively, and also for traffic management solutions. On top of that, we also see our deep packet inspection developing well in the security core area according to plan, or maybe even a little bit ahead of the same.
When we look at the new customers that we have acquired in the quarter, we have five in total, and they are all in the security area. We have three new customers when it comes to our firewall solutions, and we have two new customers when it comes to deep packet inspection. They are spread across the world, as you can see on this slide. If we continue to look at, as I said on the previous slide, of course, the geopolitical development is just continuing to accelerate, not always in the most positive side. On the other hand, it’s good for Enea, and our solutions become even more relevant than they have been before. I’m highlighting here three examples of incidents or happenings in Q3 that we see where we see an increased trend.
For instance, when it comes to massive SIM farms, there are more and more of those out in the world that are being revealed. These pose a big threat to national infrastructure from many different perspectives and is used for fraudulent activities. Here, our firewalls can counter such threats by detecting and blocking fraudulent traffic in real time. Another thing that we see developing as well is that there’s a lot of leaked location data that’s been exposed, where users’ movements into sensitive areas and private movements can be tracked. These movements are tracked by different apps that we, all of us, download from App Store or from Google Store, where we just accept the terms and conditions. Our location data is being saved when it comes to how we move and how we act. That data is then, in turn, being sold to different actors in the world.
A third, I would say, trend that we see and that we hear more and more about escalating is, of course, the increased drone traffic and threats in general. I think that we’ve seen in the quarter, we know the warfare that’s happening all around the world. Of course, on that, also the hybrid warfare with, in the Nordic countries, many drones being, so to say, disturbing traffic around major airports in major cities in the Nordics and in Europe. Here we at Enea, we are right now developing fingerprints so we can actually help our customers track drone traffic in mobile networks to make sure that we can help secure those threats in the world that we see emerging. Two other press releases that we’ve done in the quarter that are not related to new deals. We have renewed our partnership with Suricata.
Suricata is an open-source, rule-based framework where we contribute with our expertise from Enea, but we also use the Suricata framework for the development of our own solutions and products. We believe strategically and strongly that open source is a good way of developing and contributing to our product development for the future. We have also announced a new customer win with a French AI-based NDR supplier called Custosy. Custosy is using our deep packet inspection engine in their solution. They have also announced a win with the French region, Haute-Garonne. It’s a major department council in France, and they have chosen Custosy’s NDR technology to secure their asset base that consists of more than 25,000 assets and 1,500 subnets in their operations. We are very happy and proud to be part of that journey from an Enea point of view.
Last but not least, before I hand over to Ulf and we dive deeper into financials, we continue to be very active on the market, sharing our thought leadership. This slide shares you four examples, and I will only comment one of them. I think that we focus very much on, together with GSMA, to impact and help the development of both existing and future standards when it comes to mobile communication. We are very proud to be part of that and to help that. Of course, also making sure that the products that we develop for the future also support the new standards that are being brought out into the market. We want to stay at the edge. We want to be relevant, and we want to make sure that our thought leadership is seen in different parts of the ecosystem out in the world.
With that introduction, I would like to hand over to Ulf, who will take us through the more details of our financials. Please, Ulf. Thank you, Teemu. 3% growth in constant currency for the quarter, and we report a 2% decline in reported net sales for quarter three. Over nine months, we also report a 3% growth in constant currency, and we are in line with the nine months net sales previous year. We report a 33% adjusted EBITDA margin for the quarter. For the nine months result, we report a 30% adjusted EBITDA margin. This is partly thanks to, of course, the net sales development, but also that our operational expenses are declining compared to the previous year. If we exclude DNA, we are in line with the cost base that we had the previous year in quarter three.
We report a 16% EBITDA margin for the quarter compared to last year, where the reported EBITDA margin was 13%. It’s a slight increase. The major difference compared to last year is the development of the earnings per share, which is reported now in Q3 $1.77 compared to $0.18. If we look into our product area, security solutions, we report similar revenues in the different revenue categories. We have licenses almost at the same level. We have professional service almost at the same level, and support and maintenance almost at the same level as previous year. For network solutions, we can see an increase compared to Q3 previous year and a subsequential decrease, actually, in support and maintenance. Given the increased number of new deals and a solid recurring revenue, we foresee a good development of license sales going forward as well.
If you look into the different product areas, we can see a growth of 9% within the network area compared to Q3 previous year. We are having a slight growth in the security area, all in constant currency. We have a currency impact for the quarter of $10 million. Looking at the nine months report, we see a slight decline for security and a 7% growth in networks, all in constant currency. If we sum up the core, putting security and network together, we report a growth of 3% in constant currency for the nine months period. Over to cash flow, we have an operational cash flow that’s in line with Q3 previous year or a slight increase. We also can see that the investments and the buybacks are also in line.
However, we have done some amortizations higher than previous year, and we are utilizing some of our credit facilities. That gives us a net cash flow that’s better than last year, but mainly driven by financial items. We report a net debt of $211.9 million, equity ratio of 71.1%, and a net debt to EBITDA of 0.78. Coming back here to the improved financial net that Teemu mentioned initially, in the quarter three this year, we report a financial net of $87,000. This needs to be put in perspective of that we had quite negative items in the beginning of the year. An explanation to that is that we have a total impact for currency net of positive $4 million this quarter. It’s a combination of bank revaluation, bank balance revaluations, impacting us with $1 million, and impact from intercompany loans revaluations of positive $5 million.
In the quarter, we have been active in reducing our dollar positions. We have optimized our cash balance. We also have worked harder with our global treasury to secure optimized operational liquidity. We are reviewing as we speak our balance sheet to optimize our currency exposure in all different items in the balance sheet. This will lead to a reduced exposure when it comes to currency fluctuations in the future. We continued with the buyback program. In the quarter, we bought 232,000 shares for a total consideration of $17.7 million. This is part of the program that was decided by the AGM in May. We are executing on this decision that gives us or that is on a plan of buying back up to 50 million SEK of shares until the next AGM 2026.
Unnamed Executive, Executive (Possibly COO or Strategy Lead), Enea: Good. Thank you, Ulf, for that. We will conclude the presentation with a bit of a short-term outlook. We see that the market for us remains stable to moderately positive. We also say our portfolio is highly relevant for the markets and the segments that we serve. I have myself spent quite some time on the road meeting quite many of our customers in the Middle East and the North American region in the past quarter. I can confirm that we are seen very strong as a partner to our customers serving both network intelligence but also security solutions. We also expect to deliver on short-term targets for the full year, as we have stated since the beginning of the year.
As I mentioned from the first day when I started at Enea, we have been doing updates to our strategy, and we will communicate them now in quarter four, as promised. That content will be focusing on an accelerated growth agenda for us as a company. We will come back with that message later on in quarter four of this year. Finally, our guidance stays exactly the same. We have not changed our long-term guidance or our short-term guidance. In the short term, our guidance for the year is that we will see continued growth in our focus areas, network and security, with an EBITDA margin in the range of 30% to 35% and a stable cash flow for the conclusion of 2025. Obviously, we’re going to come back also with our strategy update with more information later on in the fourth quarter. That actually concludes our presentation.
We are now ready to take some questions. Operator, please.
Conference Operator, Conference Call Moderator: If you wish to ask a question, please dial #KEY5 on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial #KEY6 on your telephone keypad. There are no more phone questions at this time. I hand the conference back to the speakers for any written questions and closing comments.
Unnamed Executive, Executive (Possibly COO or Strategy Lead), Enea: All right. Thank you for that, operator. We have actually a couple of written questions. We will take them now as we speak. We will start with the first one. How much of cost improvement is driven by FX? Ulf, do you want to comment?
Teemu Salmi, CEO, Enea: Yes, a round figure for this quarter is that the change in FX has improved our cost level by roughly SEK 5 million.
Unnamed Executive, Executive (Possibly COO or Strategy Lead), Enea: Thank you, Ulf. We continue with the next question. Could you please comment on the organic growth and the weakness seen despite late quarter deals? Has there been any deterioration in the end market since Q2? Are deal closings extending further? Thank you. I would say our business is very volatile when it comes to kind of single deals that we’re signing. They might come in a quarter, or they might slip out into the next quarter. I would say that we actually see a stronger market, like I also shared in the presentation, that we see a slightly moderate positive market development. That’s kind of my and our assessment of where we stand right now. If a deal lands in one quarter or another, that can be depending on days, right? We still report in constant currency 3% growth.
Under these circumstances, we are not happy, but it’s an OK result, I would say. We have a strong and mature pipe that we are currently working on turning into sales as well. I would not say that we see a weakness in the market, slightly on the opposite, actually. We have another question. With 25% R&D investments, why are you not able to deliver better growth for the last couple of years now? Is 25% R&D needed to stand still? I think that the answer to the question is that we have a mixed portfolio, right? We don’t only have a growth portfolio. We also have a part of our portfolio that is in structural decline that we have discussed and presented many times.
I think showing our core areas that we are growing in those, not to the speed that we want and that we hope to see moving ahead, that I should be clear about. We see a 9% growth of our network business in the quarter, which is one of our focus areas. In the security business, we see a bit of slippage when it comes to signing contracts and closing deals, not necessarily that we are losing. I think definitely we need to spend those money to stay relevant and to continue to grow. The ambition is, of course, to have an accelerated growth further than we’ve had over the past couple of years. I think those are actually the questions that we have in the chat. With that, I would like to thank you for listening. Thank you also for your questions. I hand it back to you, operator.
Thanks for today.
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