Merus Power H1’25 flash comment: Revenue recognized clearly above expectations

Translation: Original published in Finnish on 8/21/2025 at 10:17 am EEST.

Merus Power’s revenue and earnings in the first half of the year were stronger than expected, though this was also due to timing factors. Order intake was 14% above our forecast. The company maintained its 2025 guidance. Our own interpretation is that the significance of the strong H1 revenue on the full-year outlook is limited. The company has grown rapidly and recently secured its first international energy storage project, but at the same time, the rapid change in the Finnish energy storage market and the saturation of the frequency regulation market may also hinder continued growth during 2026. The company will hold a press conference at 10:30 am.

Growth was concentrated in the first half of the year

H1 revenue was 24.9 MEUR, which was many times higher than the comparison period (H1’24: 6.7 MEUR) and also clearly exceeded our estimate (14.0 MEUR). Revenue recognized in H1 was clearly above our expectations, which, on the other hand, reduces the remaining order backlog, which was 29.3 MEUR at the end of H1 (H1’24: 46.8 MEUR). New orders received in H1 were 26.2 MEUR, which slightly exceeded our forecast of 23.0 MEUR (a 14% beat), but was clearly below the record level of the comparison period (a decrease of 34% y/y). According to the company, the revenue growth resulted from successful deliveries of both energy storage and power quality solutions, but we estimate that energy storage played a larger role in the growth in euro terms. However, the order book for H2 deliveries is smaller than a year ago and the comparables are high, so we estimate growth to slow down significantly in H2 compared to a very strong H1.

Profitability was supported by volumes, but not by margins

Strong revenue recognition helped Merus Power turn its EBITDA positive (H1’25: 0.3 MEUR, H1’24: -3.4 MEUR), and other earnings lines were also higher than our estimates. This marks the first time in the 2020s that the company has managed to achieve a positive EBITDA already in the first half of the year, which, particularly for power quality solutions, has typically been a seasonally weaker half (older semi-annual data is not available). Profitability strengthened due to high production volumes, productization of deliveries, and enhanced expertise. However, the release states that the company's strong growth still puts pressure on containing cost increases, which is why measures to improve profitability are being continued. Regarding the cost structure, it should be noted that the gross margin was 32% and remained below our estimate (39%), but it is challenging to make quick interpretations for the future from this, because the H1 revenue distribution also deviated from expectations due to the strong revenue recognition from energy storage. Personnel expenses relative to revenue were significantly lower than our forecast due to high production volumes and increased operational efficiency (21%, we expected 33%).

Guidance unchanged

Merus Power reiterated its guidance, stating that the company's revenue will grow strongly compared to 2024 and EBITDA will be 1-3 MEUR. We estimate strong growth to mean revenue growth of 20% or more compared to 2024 (our latest forecast was 25%). We estimate profitability in H2 will be supported by the positive impact of power quality solutions on the margin level, which would help improve profitability compared to H1 and reach the earnings guidance. The company commented that the energy storage market remains vibrant, although competition in the market is intensifying. The frequency regulation market has so far been the key segment for Merus Power’s energy storage systems, but according to the company, this market may now be saturating. In our view, new segments or markets outside Finland will need to be found to ensure continued revenue growth driven by energy storage systems.