Translation: Original published in Finnish on 04/27/2026 at 08:00 am EEST

Source: Inderes

Modulight's Q1 revenue declined year-on-year and missed our estimate. On the other hand, earnings and cash flow were better than we expected due to lower costs. The product development pipeline grew to 36 projects with three new customers, and Pay-Per-Treatment (PPT) business invoicing more than doubled year-on-year. The company recently issued guidance for the current year: the company expects revenue and EBITDA to grow from the 2025 comparison year. Our view remains unchanged with moderate estimate revisions, so we reiterate our Reduce recommendation and target price of EUR 1.2.

Revenue miss, but guidance points to an upward trajectory for the rest of the year

Modulight's Q1 revenue amounted to 1.50 MEUR, decreasing 7% from the comparison period (Q1'25: 1.61 MEUR). Revenue was also below our estimate (1.79 MEUR). According to the company's comments, the increase in customer activity that began last summer has started to materialize in orders, but these did not yet fully impact Q1 revenue and will instead support revenue later in the year. Procedure-based PPT revenue grew by over 100% year-on-year, although in absolute terms, the business is still relatively small (over 1 MEUR in 2025). The company noted that the progress of clinical trials may bring volatility to revenue between quarters in the future. Last week, the company provided guidance for 2026, based on which revenue and EBITDA are expected to grow. The guidance indicates at least a moderate pick-up in revenue growth as the year progresses.

Profitability improved thanks to lower costs

Q1 EBITDA was 0.33 MEUR (Q1'25: -0.58 MEUR) and the margin rose to 22.1% (-36.2%). When interpreting EBITDA, it is important to consider the capitalization of R&D expenses on the balance sheet, which directly improves it. These expenses amounted to 0.95 MEUR in Q1 (reported as own-use production in the income statement). Q1 EBIT was -1.06 MEUR exceeding our estimate of -1.28 MEUR. Better-than-expected earnings are explained by lower operating expenses than we estimated: the number of personnel decreased to 62 (Q1'25: 70), and other operating expenses (0.63 MEUR) also decreased significantly (Q1’25: 0.9 MEUR). Operating expenses vary from quarter to quarter, but Modulight appears to have achieved greater cost savings than we expected as a result of last year's change negotiations. Cash flow after investments was -0.17 MEUR, which was positively impacted by a one-off reduction in working capital (0.38 MEUR). Cash equivalents amounted to 9.1 MEUR at the end of the period (Q1’25: 14.6 MEUR), and net cash was 6.59 MEUR (Q1’25: 10.6 MEUR). The outlook for cash sufficiency has improved with decreasing costs, but we believe the financing risk remains elevated.

We are revising revenue and costs downwards

We are revising our estimates downwards for both revenue and costs. Based on Q1, revenue development is likely to be slightly slower than our previous expectations, and on the other hand, the cost level appears to be quite clearly lower than our previous estimates. Revisions regarding costs are fairly significant, particularly based on headcount development.

Risks outweigh potential in the valuation

The valuation of the share is uncertain due to the unpredictability of earnings and cash flow turnaround. The valuation relies heavily on future projections, which carry a high degree of forecasting risk. EV/S multiples are 5.x-4.3x for 2026-27, which we consider cautiously attractive based on the growth and profitability potential. On the other hand, financial risk and growth-related uncertainties are elevated. The DCF model (EUR 1.2) indicates that the upside in the stock is limited. Potential positive surprises could also quickly turn the valuation picture more attractive.