Aiforia H1'25: Revenue growth takes longer to accelerate

Translation: Original published in Finnish on 8/29/2025 at 7:00 am EEST.

Aiforia's H1 figures were a disappointment to us as revenue remained flat, even though revenue in the strategically most important clinical segment grew strongly from low comparison figures. The conversion of a strong customer base into revenue still requires more time than we previously anticipated, and we have lowered our estimates. The company’s market position is constantly strengthening with new customer wins, and supported by the decreased valuation, the risk/reward ratio remains attractive for those with an appetite for risk. In line with our revised estimates, we lower our target price to EUR 3.4 (was EUR 4.2) and reiterate our Accumulate recommendation.

Revenue growth fell short in the first half of the year

H1 revenue was 1.4 MEUR (+2%, Inderes: 2.0 MEUR) due to a decline in revenue from non-clinical customers. At the same time, the clinical segment's revenue grew strongly (+60%, H1'25: 0.8 MEUR) from low base figures (H1'24: 0.5 MEUR). The order book, on the other hand, remained at 5.1 MEUR, as the recognition of contract revenue offset the impact of new sales (H1: 5 new clinical customers from Europe). EBIT was still heavily in the red (H1’25: -5.4 MEUR), and current cash and cash equivalents of 11.8 MEUR and cash burn (around 7-8 MEUR/6 months) will provide funding until early Q2/2026.

Aiforia is solidifying its position as a winner in the first wave of image analysis in clinical digital pathology

An investment wave in digital pathology is underway, as the need for pathological analysis is growing and there is already a shortage of pathologists, which drives demand for solutions that increase efficiency and capacity. The market for Aiforia's image recognition software is young, and its competitive landscape is still forming. Considering the competitive factors of the company's product (cell-level recognition, deep learning models, the sector's broadest product portfolio) and significant clinical references, it has been well-positioned to build its standing as one of the market's long-term winners. Aiforia is gaining a very strong market position, as, according to public information, it has won the majority of the sector's new clinical customers in recent years and has become a market leader.

Revenue growth takes longer to accelerate

The ramp-up of Aiforia’s numerous customer wins has been slow. The trend of slower revenue recognition than our expectations continued in H1, and we cut our revenue estimates by around 20-30% and earnings estimates by 0-30% for the coming years. Aiforia’s revenue growth is still set to accelerate in the coming years as the clinical segment’s revenue growth breaks through to the group’s figures, although we estimate this timing to be in 2026-27. We still forecast strong annual revenue growth of 30-60% for 2025-28. We expect EBIT to turn positive in 2030, supported by growth, and the company to carry out 10+10 MEUR share issues in 2026 and 2027. Given the strongest market position and customer wins in the sector, we believe that securing financing will be successful, albeit at an uncertain valuation. We expect revenue to reach 31 MEUR by 2030 (target: >100 MEUR ~2030), requiring very strong strategy execution, new customer wins, and successful implementations.

Revenue miss lowered valuation and kept risk/reward attractive; yet risk appetite is needed

Aiforia's valuation (2025-27e EV/S 25-15x) relies on expectations of very strong and scalable growth. By pricing growth with varying coefficients and confidence intervals, we can justify the company's value within a wide range of EUR 0.6-6.3 per share (was EUR 1.0-7.4), which decreased in line with our estimates. Overall, we see the stock's valuation as justified at the midpoint of the range. In our view, the uncertainty regarding the growth coefficient remains a key weakness and risk in Aiforia’s investment story, which has already materialized due to the slower-than-expected revenue recognition from customer contracts. This also affects cash development and the amount of earnings-dilutive share dilution. Looking further ahead, the company still offers an attractive return expectation due to its strongly developing customer base, which in our view justifies taking on the high risks of the investment case at the current valuation.