Translation: Original published in Finnish on 8/31/2026 at 8:12 am EEST.

Aiforia's revenue development in the first half of the year was evident after the profit warning was issued in July. Profitability in H1 fell short of our expectations due to higher-than-expected operating expenses and a one-off personnel cost. The company gained new customers during the period but converting them into revenue is a slow process. We reiterate our Reduce recommendation and reduce our target price to EUR 1.1 (was EUR 1.3) given downward revisions to our estimates. In our view, the risk/reward ratio remains unsatisfactory due to growth uncertainty and unprofitability.

Decreased revenue was of a recurring nature

Aiforia's H1'26 revenue decreased by 46% year-on-year to 0.75 MEUR (H1'25: 1.40 MEUR). According to the company, delays in customer agreements and the fact that contracts signed in the early part of the year will only be recognized as revenue in H2 weighed on the beginning of the year. The company is changing its contract model, which should decrease revenue volatility between periods in the future. Commercial news flow in H1 was positive, as the company signed several contracts and launched two IVDR-certified models. Revenue development remains slow, and Aiforia's strong progress in capturing the clinical pathology image recognition software market is not yet generating sustainable business. The order book of 3.5 MEUR remained stable compared to the end of the year (3.4 MEUR) but was 32% lower year-on-year.

Costs exceeded our estimates

EBIT was -7.6 MEUR (Q2’25: -5.4 MEUR) and fell significantly short of our -5.9 MEUR estimate. This discrepancy is due to expenses that exceeded our expectations, including a one-off entry of 1.1 MEUR resulting from changes to the stock option plans. After adjusting for this, operating expenses also exceeded our expectations due to growth investments related to sales. Cash flow after investments was -5.7 MEUR, which was supported by the release of working capital (0.85 MEUR). Cash and cash equivalents at the end of June were 9.9 MEUR and net cash was 2.6 MEUR. The directed share issue carried out in June brought in gross proceeds of around 6.4 MEUR. According to the report, the current cash balance and the first 5 MEUR tranche of EIB financing (which has not yet been drawn down) are sufficient to cover needs for more than 12 months. In the coming years, we estimate that funding will primarily rely on the EIB loan, necessitating the achievement of intermediate targets.

We lower our forecasts moderately

Our revenue estimates are decreasing moderately by 3-12%, as larger adjustments were already made after the profit warning. We are decreasing our EBIT estimates by 16–21% due to lower revenue and a higher cost level. Regarding financing, we assume that the company will rely on EIB debt financing instead of share issues in the coming years, so we are updating our model accordingly. Based on our current forecasts, the loan will not quite be sufficient to cover the capital needs of the coming years, thus making a share issue reasonably likely within a few-year horizon, in our view.

High risks outweigh the potential

We reiterate our Reduce recommendation and reduce our target price to EUR 1.1 (was EUR 1.3) on the back of estimate revisions. Based on our estimates, the share trades at EV/S multiples of 16x and 11x for 2026 and 2027, respectively, which are extremely high levels in absolute terms. EV/EBIT and P/E are negative throughout the forecast period, so the valuation relies on long-term scenarios ranging widely from EUR 0.1 to EUR 1.7 per share, in which our DCF model gives a value of around EUR 1.1 in the baseline scenario. Aiforia becoming the target of an acquisition would present a positive opportunity for investors. In our view, the risk/reward ratio of the stock remains unsatisfactory due to high business and financial risk combined with a foggy growth outlook