CEO's review 29 April 2026
International growth continued, driven by the defence market
The year 2026 started as expected and the financial development in the first quarter was good. We received significant orders at the end of last year, which helped create a solid starting position for the current year. First-quarter net sales increased by 10.2 percent from the previous year, particularly due to increased demand in the Defence business, and amounted to EUR 21.3 million. The net sales of Medical Business Segment also grew year-on-year, but Engineering Services revenue fell short of our expectations due to the weak market situation. Net sales development varies strongly between quarters and after a very strong fourth quarter last year, we are pleased with the growth in the first quarter. The strong variation between quarters is mainly due to the timing of defence industry deals.
EBITDA improved significantly compared to the same period last year and was EUR 2.8 million, representing 13.2 percent of net sales. Operating profit was EUR 1.5 million, representing 7.0 percent of net sales. Profitability improved year-on-year, reflecting the positive impact of product-based revenue growth on margins and operational efficiency gains.
Cash flow from operating activities developed particularly positively, increasing to EUR 28.1 million from EUR 9.2 million in the previous year, and strengthens the company’s ability to finance its growth and investments with its cash flow from operating activities. Amount of new orders were EUR 34.8 million, of which 75.6 percent came from the Defence & Security Business Segment. The order backlog was a record high EUR 92.5 million. Looking at the current year’s development, the direction is right and growth is expected to focus on the second half of 2026.
In line with our strategy, we continued to develop all our businesses, focusing on strengthening partnerships and signed several cooperation agreements, especially with defence industry players. We have also developed our sales and distribution network to enable accelerated growth.
Bittium’s long-term investment in high-security products and solutions is bearing fruit right now, when demand in the defence sector is at a historically strong level. We will continue to invest in products, technologies and our people to maintain our strong position as a technological pioneer.
Defence & Security Business Segment started the year with a 24.1 percent increase in net sales compared to the previous year, amounting to EUR 13.3 million. Operating profit was 11.5 percent of net sales. The amount of new orders was EUR 26.3 million, raising the order book to a record level of EUR 84.4 million.
Geopolitical uncertainty in global markets is uniting European countries to promote common security.
At the end of last year, we signed an agreement to license Bittium Tough SDR software-defined radio technology to the Spanish Indra Group. Using technology, Indra develops and manufactures sovereign handheld, vehicular, and manpack radios, focusing mainly on the Spanish market. The collaboration has started well, and right at the beginning of the year we received an order for technology and production transfer projects worth EUR 20 million. The project as a whole is significant for Bittium, and has opened up new collaboration opportunities now also in countries where there is a strong local player.
We signed important collaboration agreements early this year that strengthen our position in the defence technology ecosystem. The collaboration with KNL Networks Oy combines Bittium’s tactical communications system and radios with KNL Networks Oy’s long-range radio systems, enabling seamless connectivity between tactical local area networks and users thousands of kilometers away without the requirement for common waveforms. In March, we launched a collaboration with Finnish company Sensofusion Oy to develop interoperability between tactical communications and anti-drone systems. Joint testing showed that our systems operate simultaneously with anti-drone systems without performance disruptions. Strengthening partnerships is part of our strategy to build a resilient defence technology value chain for Finland and its allies.
In the Security business, we received international recognition for our competitiveness in high-quality information security solutions when we signed a framework agreement with NATO’s Communications and Information Agency (NCIA). The agreement designates Bittium as the preferred supplier of Bittium’s secure smartphones, VPN solutions and communications software to NATO member countries, demonstrating that our solutions meet even the most demanding security requirements of the allies.
The launch of the Bittium FUSOR™ software router reinforces our strategy to provide solutions for defence forces that integrate tactical communications into broader hybrid architectures. This development has accelerated significantly in the changed security environment. After the review period, in April, Bittium and Telia verified the practical significance of FUSOR by implementing, for the first time in the world, the expansion of resilient mission-critical communications from the Finnish Defence Forces’ tactical communications network to the public 5G network
The implementation of the new security software strategy is progressing well. Bittium SafeMove Mobile VPN and other security software have been opened for licensing on other device platforms. This enables the use of Bittium’s security software on other manufacturers’ device environments, which serves the goals of the Security business’ growth strategy well.
Medical Business Segment’s net sales in the first quarter of the year increased by 9.5 from the previous year and were EUR 5.2 million. The growth in net sales was influenced by orders from new distributors in the early part of the year and higher deliveries than in the comparison period to our largest customer, Boston Scientific, in the United States. Operating profit was EUR 0.5 million, representing 8.8 percent of net sales. The organizational renewal at the end of 2025 will begin to deliver the targeted cost benefits in full from the beginning of 2026, improving the segment’s profitability. The number of new orders and the order backlog increased year-on-year.
The first quarter progressed according to plan. The collaboration with Boston Scientific continued to be strong, and the supply agreement for ECG monitoring devices signed in summer 2025 includes deliveries until 2028, strengthening our position in the global cardiac diagnostics value chain.
In line with our strategy, our international growth relies strongly on our partner network. We have continued to grow our distribution network and have established new partnerships in several European countries. We are also in discussions with several new partners in Asia, Australia, Canada and Africa as part of our broader internationalization.
Pilot studies for our home sleep apnea testing device, Respiro, are still ongoing. Some of them have been delayed due to localization requirements in different countries. We expect results from the pilots by the end of the year.
We continued product development to introduce a new measurement device to our ECG measurement device family, which supports our medium and long-term growth goals and competitiveness.
Engineering Services Business Segment’s the R&D service business product development services net sales decreased by 27.3 percent from the previous year and were EUR 2.8 million. Operating result was EUR -0.2 million, representing -8.4 percent of net sales. The development of net sales and profitability were affected by the challenging market situation, especially in the manufacturing industry. The number of new orders and the order backlog decreased, as the order backlog was EUR 2.8 million.
We increasingly focused our growth efforts on the needs of the defence industry. We will actively continue to take measures to improve our delivery capacity and competitiveness in the defence sector and build a foundation for profitable growth. In February, we deepened our cooperation with VTT. Through this cooperation, field-ready products and systems can be developed for defence-sector customers, providing added value and new performance capabilities in demanding operational environments, for example through radar technologies, wearable sensors, communication solutions, and 5G and 6G technologies or sensor fusion. Discussions with Nordic defence industry companies are progressing and we have increased Bittium’s awareness as a product development services provider.
In terms of developing our organization, we appointed Hanna Hulkko as Senior Vice President, Engineering Services Business Segment in March. She brings strong expertise in business development, internationalization, and artificial intelligence solutions.
Best regards,
Petri Toljamo