Teleste Q1'26 flash comment: Strong profitability led to earnings beat

Translation: Original published in Finnish on 5/8/2026 at 9:24 am EEST.

Source: Inderes

Teleste reported a Q1 result this morning that was clearly better than we expected, even though revenue remained flat year-on-year. This reflects a strong gross margin and previously implemented efficiency measures that support profitability. As expected, the company reiterated its outlook for the year and appears to be making solid progress on the earnings growth path we estimated for this year.

Stable revenue marked the first months of the year

Teleste's Q1 revenue remained at the comparison period level of 32.2 MEUR, which was slightly below our forecast of 34.1 MEUR. The Networks segment's (formerly Broadband Networks) revenue increased by 4% to 20.2 MEUR, which was in line with our estimate of 5% growth. At the beginning of the year, revenue growth was driven by European DOCSIS 4.0 deliveries, while the merger between Teleste's largest customer, Cox, and Charter in North America is causing a short-term shift in orders.  This was also reflected in the Networks segment's order intake (18.2 MEUR), which decreased by 25% from a very strong comparison period and slightly decreased from the previous quarter as well.

Public Safety and Mobility's revenue decreased by 6.5% to 11.9 MEUR, while our estimate expected growth of 8%. According to Teleste, however, this development was in line with expectations, and the quarterly volatility in revenue and orders is explained by factors related to the timing of project deliveries. The segment's order intake grew by 1% year-on-year, and the order book of 90.8 MEUR is at a good level. This provides a solid foundation for profitable growth for the remainder of the year. According to the company, the war in Iran had certain effects on the development of orders received from rolling stock manufacturers.

Result clearly above our estimates

Teleste's adjusted EBIT was 1.9 MEUR in Q1 (Q1'25: 1.5 MEUR), exceeding our forecast of 1.4 MEUR clearly. Teleste managed to defend its gross margin better than we expected against a strong comparison period, partly thanks to a favorable revenue mix. At the same time, the company's previous efficiency measures and continued cost discipline are evident in the improved adjusted EBIT margin (5.8% vs. 4.5%) from the comparison period, despite stable revenue. The Networks segment's adjusted EBIT (11.9% vs. Q1'25: 7.0%) improved significantly from the comparison period. This reflects a good product and market mix, as well as disciplined cost management. Profitability in Public Safety and Mobility (5,5 % vs. Q1'25: 9.3%), on the other hand, was lower than in the strong comparison period, which included larger software deliveries in video security.

Teleste's operating cash flow (-1.5 MEUR) was negative at the beginning of the year, impacted by working capital commitments. According to the company, component availability has tightened, and the company took steps early this year to prepare for larger deliveries at the end of the year on a front-loaded basis. Additionally, a single major customer's working capital optimization before the financial statements is reflected in Teleste's receivables growth early in the year.

Outlook unchanged as expected

As expected, Teleste reiterated its outlook and guides for revenue of 140-160 MEUR and an adjusted EBIT of 7-10 MEUR for this year. Earnings are still expected to be weighted toward H2, which, after a strong Q1, bodes well for the full year's performance. The merger of Cox and Charter is now expected to be completed in the second half of the year (previously by mid-year), creating uncertainty regarding the key customer's short-term investment level. However, the increase in deliveries in Europe seemed to offset this well, at least in the early part of the year. Teleste's outlook for growth in North America remains very good beyond a few quarters, as the company already has over 20 customers on the continent. The expanded customer base of Public Safety and Mobility and the implemented efficiency measures create a solid foundation for continued profitable growth. Our forecast before the report expected revenue of 150 MEUR and EBIT of 8.8 MEUR for this year. Based on preliminary estimates, the full-year forecast may see slight upward pressure following a strong Q1.