Following INVISIO's Q3 2026 interim report, we have updated our investment case on the company. Our updated investment case covers the key investment reasons, risks, and valuation perspective relative to peers across Nordic/EU defense equipment, international defense communications, and audio/hearing protection.

INVISIO delivered Q3 2026 revenue of SEK 408m (+40% y/y), lifting 9M growth to +28% y/y (+31% in constant currency), while EBIT improved to SEK 32m (-3m) and net profit reached SEK 31m (-4m). The y/y growth is flattered by a weak Q3 2025 affected by rescheduled deliveries, but revenue was still 16% above Q3 2024. Order intake of SEK 566m (+18% y/y) was the highest third quarter on record according to management, and the order book rose by SEK 150m q/q to SEK 648m. However, the gross margin fell to 56.0% (57.0%), weighed down by a higher share of partner sales (-1.5pp), US tariffs (-1.0pp) and higher electronic component prices (-1.5pp), which according to management implies an underlying level of around 60%. EBIT was around 37% below pre-report consensus of SEK 51m (Modular Finance, 10 analysts), and the share fell 12% on the day of the report.

There are clear indications that the US softness in H1 was timing-driven rather than structural. In H1, US orders were delayed by a partial federal government shutdown affecting the Department of Homeland Security, which includes the Coast Guard, and by a reorganization in the Department of Defense. In Q3, North American revenue rose 57% y/y, and management estimates that roughly SEK 50-70m of the quarter's order intake was catch-up from H1. The first large order under the SEK 930m US Coast Guard framework is still pending and is now expected in Q4 or Q1. Q3 also delivered a strategic milestone in the form of a multi-year framework agreement covering all branches of the Canadian Armed Forces, worth up to SEK 450m and placed via a local partner without guaranteed volumes. Additional T30 production capacity has been secured, with thousands of units now shipped per month, and the ramp of the T30 headset, INVISIO Link™ wireless and H Series smart hubs continues into 2027.

The quarter reinforces a central point in the investment case: order intake and revenue remain lumpy from one quarter to the next, but the underlying direction is clear. Q3 book-to-bill of 1.39x followed 0.54x in Q2, while R12 book-to-bill stands at 0.90x and the order book is 27% below last year, which management attributes to faster conversion. Revenue grew at a 5-year CAGR of 27% to 2025, and on consensus estimates is set to compound at ~19% to 2028E, with EBIT compounding at ~33% over the same period.

The key investment reasons continue to center on structural NATO rearmament tailwinds, with European defense spending of EUR 380bn in 2025 already +60% above 2020 levels and the NATO 2% GDP target now being accelerated towards 5% by 2035, providing a multi-year procurement backdrop into which INVISIO's NATO-qualified products fit directly. High operational gearing in an asset-light model with subcontracted production enables margin expansion as the topline scales, with the 2025 EBIT margin of 17.8% already well above the Nordic/EU peer median of ~10.4% and operating costs flat at around SEK 195m per quarter through 2026. A market-leading position underpinned by regulatory hurdles, co-development with armed forces and 3-5 year procurement cycles supports high switching costs and recurring upgrade orders, and the shift from headset supplier to integrated soldier and vehicle system provider, via the T30, Link™, H Series and the UltraLYNX bolt-on, raises revenue per customer. The company also continues to pay dividends alongside growth, with a 5-year average payout ratio of 48%.

The key risks remain centered on valuation expectations and revenue lumpiness, now joined by gross margin pressure. The share trades at a ~50% premium to peers on 2026E EV/EBIT, which has widened as estimates were cut, leaving limited room for execution slippage in the margin recovery or the new product ramp. Lumpy revenue and order intake creates q/q volatility, as 2026 illustrated with delayed US orders in H1 followed by a rebound in Q3, and larger framework orders may exacerbate this going forward. Partner mix, tariffs and component costs weigh on the gross margin, with any price changes only taking effect from January 2027. Defense supply chains may struggle to keep pace with industry growth, partly mitigated by INVISIO's strong inventory position and third-party scale options. Modern warfare is also evolving rapidly, and equipment priorities may shift over time – though INVISIO's Drone Aware™ launch demonstrates agility in responding to emerging threats.

From a valuation perspective, on 2026E multiples, INVISIO trades at 30.2x EV/EBIT and 40.2x P/E, a ~50% premium to peer medians (20.1x and 25.8x) that has widened as 2026E estimates were cut, despite share price weakness (-19.0% YTD). On 2027E estimates, multiples fall to 16.7x EV/EBIT and 22.6x P/E, a discount to peer medians at 19.8x and 24.0x, though this rests on consensus EBIT rising ~80% to SEK 570m (22.8% margin). The valuation is supported by a superior growth profile (revenue CAGR 19% and EBIT CAGR 33% over 2025-28E versus peer medians of 13% and 13%), while the margin edge has narrowed (2026E EBIT margin of 15.8% versus the peer median of 14.6%). With the US recovery now visible in the orders, near-term performance hinges on gross margin recovery and the timing of the first large US Coast Guard order.

For further insights into the Q3 results and management's focus areas going into 2027, you can watch the event we hosted with INVISIO: https://www.inderes.dk/videos/invisio-praesentation-af-regnskabet-for-3-kvartal-2026

Disclaimer: HC Andersen Capital receives payment from INVISIO for a Digital IR subscription agreement. /Rasmus Køjborg and Jacob Frehr 16:00 10/11-2026