Seppo Orsila: My name is Seppo Orsila, founder and CEO, and here I have me, as usual, our CFO, Mrs. Guina.
Anca Guina: Hello.
Seppo Orsila: Today we will be starting with the usual formula, covering Q3 in a nutshell. Anca will talk about the finance, then I will further elaborate a little bit about the progress in the pipeline, and we will finalize with the summary and take all your questions at the end as usual. Just before going to the Q3, just to give the new viewers on the line, which are surprisingly more today, many, I am just with this one slide to remind everybody that Modulight is a life science company fighting cancer with science and technology. We also provide the same lasers to people in other high value-add applications such as microscopy, semiconductor technology, flow cytometry, quantum and defense technologies. Let's go now to the bit. Here are some pictures from the previous quarter, from different surgeries. Let's go forward with the Q3.
Seppo Orsila: Extremely pleased to see that the successful trend with the customers started earlier this year has continued. Also, a somewhat positive surprise in an uptake of the revenue for the Q3, which has often been a little bit soft due to the summer season. Particularly progress in the pipeline, across the pipeline, which we are going to talk about more in that section of the presentation. Lots of increased activity, particularly during the Q3 in category of significant global companies wanting to accelerate their projects in a number of different segments. Extremely happy to return to a healthy profitability with EBITDA of 53%. Anca is going to cover that, I am sure. So take it away, Anca.
Anca Guina: Thank you. In Q3, the revenue increased by 7% to EUR 1.9 million compared to the corresponding period. The PPT business continued to grow strongly and reached EUR 500,000 in Q3, which is basically an increase of 110% from same quarter last year. The revenue development was influenced by the diversification of our customer portfolio as well as the progress and increasing number of the existing projects.
Anca Guina: We have seen very broad interest in our products and manufacturing capabilities across different customers, applications, industries, in all our geographical markets. EBITDA continued the positive trend, which we started in Q4 2025, and reached EUR 1 million, accounting to 53% EBITDA margin. The improvement in the profitability was supported by the PPT pricing model, which we already announced a quarter behind, or the previous quarter, increased operational efficiency, improved cost structure, broader utilization of our product platform, and the development of our business structure.
Anca Guina: Order intake in Q3 amounted to EUR 3.5 million, which was an increase of 157% from Q3 2025. The most important thing is that a significant part of this shifted now from one-off development and NRE projects towards product orders and recurring product revenue. Free cash flow from operations was EUR +240,000 in this quarter versus -EUR 1.1 million last year. Next slide. For the first nine months of the year, the PPT business improved by 127% to EUR 1.5 million, and the revenue for the same period was 7% lower than in the corresponding period. EBITDA margin of 28% compared to -15% last year was influenced mainly by the increased operational efficiency and better margin structure for certain products. There were very positive developments also in the operating profit, EBIT, and the results for the same period compared with 2025.
Anca Guina: The importance of Modulight's vertically integrated manufacturing facility continues to increase, and together with the versatility of our technology platform and also the geopolitical location, strengthens our competitive position. Cash flow from operating activities was +EUR 800K, and the free cash flow from operations was -EUR 1.1 million versus almost -EUR 4 million in 2025. Next slide. The development we have seen in this quarter, in Q3, was a clear significant step towards achieving our objective for the strategy period. Our revenue returned to growth. EBITDA margin reached 53%, which basically was more or less the level we used to have before the IPO. At the same time, the PPT business continued to grow significantly. Order intake strengthened considerably. We had an increased number of projects started previously, which moved basically towards productization and production. We have improved our operational efficiency, and we paid particular attention to the cash consumption.
Seppo Orsila: Thank you, Anca. I think the progress in the pipeline is pretty well-described by the financial metrics and the fact that we keep on investing and at the record number of projects. I think that especially happy about the cash flow development, which was slightly better than I thought it would be, despite some, let us say, preparatory activities related to maturation of some of the projects. Conventionally, you would actually expect them to hinder the cash flow rather than do the opposite. I think that despite some of the preparatory activities, things are developing quite positively across the metrics from revenue to cash flow and in between.
Seppo Orsila: Obviously extremely happy about the quality of the orders as well as the amount of order intake, but really the fact that, probably more than for a long time, the order book represents what Anca described as recurring orders rather than one-offs and other types of NRE activities. Certainly, PPT is starting to also show as a material number in our quarterly performance, and this obviously strongly supports the profitability as well. I am perhaps most interested about the overall development as several big customers are now concurrently pushing forward in their own projects, and this is something that we look forward to continuing. Customer base, fairly steady, but the number of bigger customers continues to grow, and this is obviously something which we have worked very hard for a number of years, and that is also in line with the strategy. We retain our outlook.
Seppo Orsila: No updates to that. We expect to grow this year and next year and return to strong profitability. I would say that EBITDA is now in a fairly decent condition, although not yet where we need it to be. This is mainly corresponding to the pre-IPO levels and what we have traditionally achieved. With all the investments we have done, we should expect improvement. Summary. Pipeline is increasing share with large customers, but more importantly, the progress across the pipeline, and this obviously is something that we have been looking forward to for so long time. The fact that we are reaching 53% EBITDA is a good stepping stone on our way to execute our strategy. Happy to see some sales growth, but especially about the progress with the projects in the pipeline, which takes us towards our goals.
Seppo Orsila: Quite happy also about the somewhat better than expected cash flow, but even there, the net cash flow obviously turned into positive and is something that we are working towards. Fourth, pretty much these are our updates, and we are happy to take any questions that you might have. Antti, do you want to go first?
[Analyst] (Inderes): Hi, can you hear me?
Anca Guina: Hello.
Seppo Orsila: Yeah, we hear you.
[Analyst] (Inderes): Great. Thanks for the opportunity to ask questions. Your PPT revenue grew strongly year over year, and during the first 9 months it was relatively flat, about EUR 0.5 million per quarter. I wonder if you could comment a little bit on the drivers behind the PPT revenue. Is it mainly due to number of clinical trials and activity of clinical trials? How is the VISUDYNE revenue developing underneath? Also, if you could provide some outlook on the activity and number of clinical trials that are ongoing and starting.
Seppo Orsila: Yeah, thanks, Antti. We have different dynamics in the net PPT revenue, which we didn't break down. We did announce that during Q2, one of the big trials reached its Phase 3, or completed the Phase 3, which was obviously good news from the overall perspective point of view, but that will obviously then reduce the number of treatments in that particular trial to zero. The fact that our overall revenue keeps growing is then obviously suggesting that in other areas, there is volume increase and price increases per number of treatments done. This is basically the net effect that despite some of the trials completed and are now at the follow-up, we have been happy to see net revenue improvement. Yes, there are several sites and indications where there has been also volume growth.
[Analyst] (Inderes): Okay, great. Then on your operating expenses, they have come down this year. I was wondering if you can talk a little bit about what do you expect on the development of the operating expenses going forward, and if there was anything one-off or unusual in Q3 in the OPEX area.
Anca Guina: I start with the end, answer from the end to the starting of the question. No, there was no one-off transaction. It was just normal business. We announced more than a year ago that we started streamlining our operations, and you have seen results of that every single quarter since then. I do not have a plan to increase the operating expenses, but I have to emphasize that of course, as the business grows, the operating expenses cannot really stay at this level. If next year I come and tell you that our revenue is more than double, most likely you will not see the same operating expenses. This is one thing. We still see, and we will see quarterly fluctuations. Nothing special in Q3, just normal operations. Of course, still trying to have cost decreased to the minimum necessary level.
Anca Guina: We will not change this attitude towards spending. Yes, we believe that our profitability will stay at least at the level we had this year.
Seppo Orsila: If I might add, Anca's intention was not to anyhow guide the future revenue.
Anca Guina: No, sorry. It was just an explanation. I wanted to express the kind of change in operating expenses together with the
Seppo Orsila: You did well.
Anca Guina: Yeah, with the business.
[Analyst] (Inderes): Okay, thanks. One more question. Your order intake was developing nicely during the quarter, of course, part of that was the neuroscience order that you recently announced. But other than that, what were the main drivers, or was there a specific area that was contributing to that order intake?
Seppo Orsila: The orders, other than that, came across the portfolio. Like we discussed in the release, what was particularly nice that most of them, probably more than ever, were related to just customers doing pilot orders or production orders and pushing forward with their operation business. This does not mean that we will not in future announce any one-offs or NRE deals, but we are seeing also a very strong order collection, particularly among the recurring orders.
[Analyst] (Inderes): Okay. That's very good. Thanks very much, and that's all from me.
Seppo Orsila: Daniel, do you wish to ask for something?
Daniel Lepistö: Hi. Yeah. Hi, hope you can hear me.
[Analyst] (Inderes): Yes.
Daniel Lepistö: Yeah. It's Daniel Lepistö from Danske Bank. Congratulations on the strong report on Friday. I have couple of questions and topics still on my mind, maybe starting up with what Antti concluded on the order intake. I am also curious what's the segment split behind this order intake? Is there an equal representation of medical orders, maybe this neuroscience order? Is there semiconductor defense? Can you open up this segment split behind this order intake a little bit more? Thank you.
Seppo Orsila: Yeah. Thanks, Daniel. As you know, we have not been reporting splits due to the fact that overall numbers are still relatively small. I would say that if you look at the neuroscience that we announced and overall kind of development, it will be pretty easy to see that with rather high probability the life science is a clear majority. Regarding defense, which many companies are announcing, if we have something big and material, we will definitely announce that like we do with all the other deals which exceed 10% of last year revenue. This is a kind of a process that we have been following and we will continue to follow unless otherwise advised in our communication policy. But no kind of additional, let's say, splits that we are prepared to share at this time.
Daniel Lepistö: Okay. That is clear. Then maybe on the product sales, which you seem quite satisfied about. The mix is improving, so the same question applies to this. What are the segments you are making these product sales currently? Is it also the life science base?
Seppo Orsila: Yeah, I would say that the mix is pretty good across all the different applications that we mentioned. I believe that we did say already earlier this year that the semiconductor technology is something where our products are in high demand. This is not to suggest that a majority of the revenue was semiconductors. I would say that life science has a very strong role in the revenue base as well, as it should be reflecting the orders. But there have been probably more demand for our products from major companies globally who manufacture semiconductor equipment than, for example, from flow cytometry or defense.
Daniel Lepistö: Yeah, that makes sense. The next question, it is actually on this InP technology you have now mentioned a couple of times. You say, I guess, in the report that you are engaging in discussions with several parties. Can you talk a little bit about your current capabilities on this InP space, what comes to actually manufacturing these and whether there would be a need of any investments to ramp up if you, for example, secure the deal of manufacturing these lasers? Thank you.
Seppo Orsila: Yeah. Thank you, Daniel. For those of you who have followed Modulight a really long time, you know that more than 26 years ago, Modulight was founded to commercialize indium phosphide ridge waveguide laser technology. We did some of the things in that space for the first time by anybody in the world together with leading US tech companies. That is obviously the legacy where we are starting from. I would say that many of those lasers that were invented and developed at that time are closest matched to what today is called the data center inside and outside the data center communication. The amount of investment that would be needed would be difficult to speculate without knowing exactly what and how would need to be manufactured. Modulight has a quite significant manufacturing capability for those technologies as they are actually having very high synergies with our existing portfolio.
Seppo Orsila: But we cannot comment on the possible investments without specifically saying what exactly will be manufactured. But as all of you know, we have made significant investment over the past years or since 2019. The key objective of these investments was to drive our repeatability and process reproducibility and quality upwards. As a side product, we got a very significant spare capacity, and that is because the best quality, best reproducibility in the tools that we employ is coming with the high volume manufacturing tools. Yes, we do have a significant extra capacity at our disposal that could, among other things, be used for manufacture of the indium phosphide lasers. Yes, we have a long know-how on that technology, but in the recent years, we have been focusing on what some people might call more niche applications.
Seppo Orsila: But as highlighted already, Q2, there have been some interests, and now that interests have continued to evolve and expand, and we are thus discussing with multiple partners on possible collaborations. But we will announce more details should some such things become material.
Daniel Lepistö: All right. That is clear. Maybe still a quick follow-up on that. What could be the lead time for start the actual production if you would be able to secure a partner or order?
Seppo Orsila: It also depends very much what needs to be manufactured. For some of those products used by the mainstream companies, we have been manufacturing them for a long time for other specialty applications, so there the lead time can be even short one. But the array of different products and their qualification requirements in the data center space are varying a lot to our understanding, and thus will vary the qualification time as well. But compared to the life science approvals, they are all being short. Any other questions, Daniel?
Daniel Lepistö: No, that's all from my side. Thank you very much.
Seppo Orsila: Okay. We have some questions on the line. I guess this one goes to you, Anca. What were these other operating incomes?
Anca Guina: Yes. We have basically to other operating income goes usually the technology development which is partly supported by, I give as an example, Business Finland, sorry, or I don't know, other government related entities.
Seppo Orsila: There is a question about how we see PPT revenues developing next year. Here, I am sorry that I have to deflect a bit that Modulight is not issuing the guidance on revenue or specifically certain specific revenue line. Obviously, PPT being core to our strategy, and we say that our objective is to grow the revenue this year and next year. So indirectly, one could conclude that we intend to grow the PPT revenue as well, but as said, have to be very clear that we are not guiding any specific line items other than the total revenue and EBITDA. Then we have a question. How much do we expect VISUDYNE-related treatments to grow on your device once the new EU supply chain begins to ramp up its verteporfin production in 2027 and opening up the supply bottleneck?
Seppo Orsila: This is a very good question, which has been kind of discussed over the past several years. There has been both on the clinical side as well as the public domain discussions about the VISUDYNE supply chain and its challenges, not only in Europe, but elsewhere as well. But for us, I guess it is not our business to comment on the actual pharmaceutical supply chain and its challenges.
Seppo Orsila: I am extremely happy to see more news today about supply chain easing than the difficulties that have been reported in the public domain earlier. But unfortunately, we are not able to comment on the third party's kind of operational aspects. I believe that this is all the questions that we have on the line, so we thank everybody for participating and wish you a great week and look forward to meeting you latest early next year when we announce our Q4 numbers.
Seppo Orsila: Thank you very much.
Anca Guina: Thank you. Bye.
Seppo Orsila: Bye-bye.
Operator: Goodbye
