Niina Ala-Luopa: Hello everyone, and welcome to Vaisala's Q3 Results Webcast. I'm Niina Ala-Luopa from Vaisala's Investor Relations. Vaisala has today published its January, September interim report. During the next hour, our CEO, Kai Öistämö, and CFO, Heli Lindfors, will present our Q3 and full year year-to-date results. Like always, after that, we have time for questions. Now, without further ado, I will hand over to Kai.
Kai Öistämö: Thank you, Niina. Welcome everybody. I'll start with the statement that is on the slide. We had an excellent quarter with a record high profitability and orders received. Really was a very good quarter. Let's look a little bit deeper into what made the quarter. In terms of numbers, what made it excellent, orders received up 38% compared to a year ago, resulting a significant increase in order book compared to the beginning of the year or end of last year. The net sales grew 6% when we look at the company level. Here you have to remember, especially on the Weather, Energy, and Environment side, very high comparable on the Q3 last year where we had the Spanish radar project in a full delivery mode. So the revenues on Weather, Energy, and Environment on Q3 last year were on a very high level.
Kai Öistämö: All this kind of success in terms of getting sales in and the mix then resulted in very high profitability as well. So almost 25% EBITDA margin in a quarter, I think that is something to be very proud of. So where did it come from a business side? Industrial Measurements once again performed in an exceptional way, driving the group's results. Xweather continued to go steadily, 9% year-on-year growth, and then Weather, Energy, and Environment achieved a strong order intake. I think even on a performance side, yes, some decline compared to last year because of the very, as I said, very high comparable, but if you take that out, I think we can be quite satisfied on the profitability and the performance on Weather, Energy, and Environment, and obviously the Indonesia deal kind of was a big event in the quarter.
Kai Öistämö: During the quarter also, we updated our annual guidance. We updated in 12 October 2026, and we narrowed our net sales guidance to EUR 610 to EUR 630 million, and then we changed our EBITDA guidance to be now EUR 110 to 120 million. Before going any further, I just want to remind everybody on our strategy. So our mission statement is taking every measure for the planet. What we do is instruments and intelligence for climate action. We are situated very nicely in major megatrends in the world: energy transition, decarbonization on one hand, AI everywhere another one, and resilient societies being third. Resilient societies meaning not only the different kind of geopolitical things, trade wars, even wars, but also resilience to more and more frequent, tougher and tougher extreme weather events due to the climate change or possibly also health challenges and aging populations.
Kai Öistämö: Our key strategic drivers remain same as what they have been: expanding and accelerating in Industrials. It is lead in weather across from instruments and observations to insights, driving recurring revenue and services business, and then transforming with AI. Transforming with AI means obviously a lot of things. It is about having AI at front and center in many of our products and solutions, transforming how we operate kind of with AI and improve our ways of working, kind of making us more effective, but also listening to our customers. How does AI change their life and their realities, and how can we be part of that and help them taking benefit of what AI brings to their business? If we look at the progress on the strategy now in light of what I just said during the Q3, I will pick couple of events on the quarter itself.
Kai Öistämö: First of all, I said growing with Industrials, we really had that at full force during the Q3. Really a broad-based growth in Industrial Measurements boosted by the AI-driven investments. It was a very kind of a broad growth across all geographies, all our end market segments. But obviously one needs to highlight data centers, one needs to highlight semiconductor, one needs to highlight power and battery manufacturing as well. Not only that, we continued to strengthen our offering across the board. Here, maybe I will just highlight one specific example of this, which would be the productized offering for services for data centers, which I am particularly excited about what the opportunities that bring in the coming months and quarters. On Xweather side, as said, we continued to progress steadily on the sales side.
Kai Öistämö: But not only that, couple of interesting points there, kind of proof points during the quarter, one being the announcement with NVIDIA, where we showed together with NVIDIA how much we can, with our data, improve the leading AI weather forecast and weather model that NVIDIA has developed, how much we can improve the accuracy. It really kind of is a clear proof point what a moat we have with our proprietary data and access to data and fusion of the data inside of Xweather. The other example here on the slide would be the Chicago Mercantile Exchange, which has launched now a weather derivatives and options scheme based on Xweather data, and again, proving kind of the leading position that we have on kind of interesting, relevant weather data for businesses.
Kai Öistämö: Part of leading weather across observations and insights was also the observation side, so well progressing on Weather, Energy, and Environment. The big Indonesia deal, the EUR 25 million airport weather modernization project gives us a good basis for the coming years. It is a big deal which we plan now to deliver over the next three years, and it, like said, it gives us a good kind of a basis for planning and executing come next year and the few years to come. Maybe with this, I will invite Heli Lindfors to go through the financials.
Heli Lindfors: Thank you. Good afternoon from my part as well. If we take a look at the financials a bit, as Kai Öistämö mentioned, our Q3 was excellent. Record high order intake, solid net sales growth, and very strong profitability. Our orders here received increased by 38% year-on-year, coming from both the Industrial Measurements as well as Weather, Energy, and Environment side. This boosted our order book to EUR 215 million, 16% above the level at the end year of 2025. ARR also increased to EUR 60.9 million, 9% up from Q3 2025. Net sales then increased by 6%. There, the driver was Industrial Measurements by 28% and then Xweather by 9%, and the Weather, Energy, and Environment side declined 11% on a strong quarter, as mentioned by Kai Öistämö earlier. This net sales growth then improved our gross margin as well to 61.5 percentage points.
Heli Lindfors: Here we have the EUR 9 million impact on the gross margin. Oh, sorry, EUR 4 million impact on the gross margin. Without the US tariff refunds, the gross margin would have been at 59 percentage points, so still a very strong gross margin driven by the Industrial Measurements growth and gross margin development. That also boosted the EBITDA to 24.9 percentage points of sale. It would have been 22.5 without the US tariff refunds. If you then look at the return on capital employed, that was 23.3%, driven by the result as well as the strong cash flow. On the Industrial Measurements side, a quarter ago, I said that it was a record quarter and a strong quarter on many fronts, and it was the same now in Q3. Orders received increased by 24%, coming from a wide base from all regions and all market segments.
Heli Lindfors: That also boosted the order book to EUR 54.5 million. Similar to Q2, we did receive larger data center and power orders that are shaping the order book to be a bit longer, rather coming from weeks to a few orders then being on a months level as well. The net sales increased by 28%, and there, the Q2 order intake was visible and started to grow. Q2 growth was only 10%, whereas now we saw the 28% growth. There, the growth was driven by data centers, semiconductors, battery manufacturing, and power industries. So the base is very wide. The gross margin improved to 65.8 percentage points, coming really from the scaling impact of the net sales as well as the favorable sales mix. This gross margin improvement does not have the tariff refunds. Those are only at group level.
Heli Lindfors: The EBITDA then was also record high, above 30%, with 31.7 percentage points, and really coming from the strengthened gross margin. On the Xweather side, the growth continued steadily at 9 percentage points. It was driven by the insurance industry, as well as sales to developers and API customers. The gross margin also improved following the net sales growth, and similar to the EBITDA percentage, also improved to 9.4 percentage points from 6.9 percentage points. As mentioned, the acquisition of Atmo, Inc., as announced in Q2, is progressing as planned. The transaction is expected to close now during Q4. Then on the Weather, Energy, and Environment, the very strong orders received was the highlight of the quarter, with the EUR 25 million airport project from Indonesia. Even without that, the orders were growing, which is a positive side on the weather and energy side.
Heli Lindfors: The net sales, they decreased by 11% following the strong comparisons of Q3 2025. The decline came from the project sales. As you can see from the report, the figures, both the product sales as well as service sales grew in Q3. The gross margin then improved following the sales mix, more products, less projects, and that also shielded the EBITDA slightly, so the EBITDA declined to 17.3% following the net sales decrease. If you look at the Indonesian order, it is good to note that the EUR 25 million order intake we expect to generate sales in the next three years to come. So it is not a one-off sale, but rather during the three next years. Then if you look at the cash flow side, our cash flow was very strong following the increased net result, the tariffs received, as well as timing of tax payments.
Heli Lindfors: Cash flow from operating activities during January, September amounted to EUR 84.4 million compared to EUR 58.9 million. If we look at the year-to-date development, net sales have grown by 6 percentage points in constant currencies. Now in Q3, the FX impact was already fairly minor, whereas in the beginning of the year it was higher, and that is also why we still see the impact in the year-to-date figures. Operating expenses have increased by 5% compared to the previous year, and the growth is driven by the investments in Industrial Measurements as well as Xweather. The corporate and non-operative items, they were -EUR 2.2 million, compared to -EUR 7.2 million last year. This is from two points, the difference and the positive impact from the US tariff refunds that improved our gross margin by EUR 4 million.
Heli Lindfors: In addition, we had some restructuring costs last year in Q3 that also made the cost higher then. The high profitability, EBITDA 18.5% against 15.7% last year, is a strong EBITDA for us. As said before, it is really coming from the increase in sales, increase in gross profit, as well as the tariff refunds. If you look at the financial income and expenses, it is only one third of what it was a year ago in the first 9 months, and that is coming from the fact that the FX rates have been less volatile this year, and we have had less loans. Those are the three key drivers there on that side. Then we have the heading of this slide, "Strong financial position." It is actually the same heading we have now had for 26 quarters in a row. This is already a legacy.
Heli Lindfors: We cannot change this anymore. Our net debt also, kind of following the strong cash flow, our net debt is negative by EUR 20 million, and as such we have the strong financial position. If we look at the CapEx, that is lower than last year. Last year, we were building the automated logistics center, which boosted the CapEx back then, and this year we do not have the same. If we then look at the market outlook for this year, we expect the development on the Industrial Measurements and Xweather to continue growing, and then we expect also the meteorology and aviation to continue stable. Of course, here the order intake was strong in the aviation side this quarter, but overall the market is stable in our view.
Heli Lindfors: We did change the renewable energy to decline as a market outlook, and there we have seen the difficulties continue this year, and thus we now put it to decline. Actually, there is still business outlook, of course. As already mentioned by Kai, we updated our business outlook on 12 October. Now it says EUR 610 to 630 million in sales and operating result to be EUR 110 to 120 million in EBITDA. This now concludes the prepared remarks, and I will ask Kai to join us for the questions. I think the lines are now open.
Kai Öistämö: Yes.
Operator: If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Nikko Ruokangas from SEB. Please go ahead.
Nikko Ruokangas: Hello. This is Nikko Ruokangas from SEB. Thank you for the presentation. I have a couple of questions. I would like to start with Industrial Measurements. The gross margin was strong there, but we also saw quite high increase in fixed costs year-on-year. Should we first extrapolate those fixed cost increases going forward? On the other hand, the gross margin you also used in the report were exceptional when talking about Industrial Measurements profitability. Does that mean that there was something one-off type in gross margin or did you mean just that it was very strong?
Heli Lindfors: I believe that we meant that it was very strong. Of course, it is good to note the seasonality we have in our gross margin. So Q3 is always the strongest, well, not always, but usually the strongest of the quarters. As such, that also explains part of the
Kai Öistämö: Mm-hmm. Yeah.
Heli Lindfors: gross margin. On the cost side, you asked, part of the cost are growth driven, so we do have to make investments also to support the growth there. As such, those are investments we do.
Kai Öistämö: Yeah.
Nikko Ruokangas: All right. We should expect also costs continue growing. All right. Thank you. Then, on tariff refunds, a bit more technical question. Are all the tariff refunds you expect to receive already in your Q3 numbers, or should we expect also more in Q4 or later?
Heli Lindfors: Most of the tariff refunds we expect to get have now been received.
Nikko Ruokangas: Okay. Thank you. Then, one last from me at this point on Industrial Measurements order book structure. As you mentioned that there are a couple of orders that have a bit longer delivery time than you have used to have in Industrial Measurements. Do you think that this kind of structure, where you have a couple of these kind of orders, will remain, or do you see going forward with data centers and related industries growing, that the order book structure will continue to be longer going forward or even longer than this one?
Kai Öistämö: I think there's three things that will have an impact on the shape of some of the order books. There's still a strong element of sales which is within the month and so on, so that has not changed. But the things that you mentioned, bigger projects, data centers would be a good example of that, bigger share of the bigger projects really has been so far, typically on life sciences, now more and more on data centers. Power has bit of a similar kind of a thing that it may be, especially when it's a larger deal and multiple transformers in question, may have a little bit of a similar kind of an impact.
Kai Öistämö: I would like to highlight also bigger services deals that then, of course, have a different kind of a shape in terms of then delivery. It might not be even months, it may be a year, or maybe in some cases even longer.
Heli Lindfors: In the release, we actually comment on how much of the order book we will deliver still this year. In the Industrial Measurements side, 69% of the order book was still to be delivered within this year.
Nikko Ruokangas: Yes, I understand. Thank you. This helps. That is all from me at this point.
Operator: The next question comes from Matti Riikonen from DNB Carnegie. Please go ahead.
Matti Riikonen: Hi, it is Matti Riikonen here. Couple of questions. First of all, the tariff refund question was already asked. You said that you collected all the refunds in the Q3 number, is that correct, the EUR 4 million, or did you get already something in Q1, Q2 time, which was not separately reported as a one-off?
Heli Lindfors: In Q3, we received all that was related to 2025. Earlier, we have received some that were related to this year.
Matti Riikonen: Okay, good. Going forward, as the tariffs have now been lowered and you are getting some extra benefit compared to previous year when you had the tariff increase, what happens to that extra money? Are you returning now it to your customers, or are they demanding that to be returned, or is it something that you can keep for yourself?
Kai Öistämö: We certainly plan to keep it to ourselves.
Matti Riikonen: All right. In that case, what is the kind of gross margin increase coming from the money or the tariff that you kept to yourself compared to what was paid? I am just thinking that what is the gross margin increase due to the tariff change for the positive?
Heli Lindfors: I would actually say that, as we reported the tariff refunds related to last year, we have reported them in group items, so they are not visible in the business figures. The business figures, that includes our current pricing and the correct tariff level and all the such items. So, I would actually use that as the figure as it is.
Matti Riikonen: Okay. So you are not willing to discuss that how much of extra boost to your gross margin, which is now reported in IM, for instance, is coming from the lower tariff, which was forced by the US courts to be lowered?
Heli Lindfors: No, we haven't commented.
Kai Öistämö: No.
Matti Riikonen: Okay. I will stick to the gross margin question because, of course, your IM gross margin seems to be quite nice at the moment. I was just wondering that, are there big differences between different customer segments when it comes to gross margins? Could you give us some light what kind of variations within the IM gross margin you have depending on customer groups? I am not asking you to specify any particular groups, but just that how many percentage points could there be variation between customer groups.
Kai Öistämö: There is some variation on some cases. Obviously, if I take maybe a silly example like services, has obviously a different gross margin structure than typically the probes. But if I take one group, like probes, whether we sell them to life sciences or data center or some other kind of environments, there is not really a difference in terms of if I look at the customer groups per se, that it is quite similar. Of course, different products have different gross margins that may vary as well between the products, but not the customer segments per se.
Matti Riikonen: Okay. Finally, you released an interesting piece of news related to the NVIDIA Corporation. I was just wondering that, is this new net revenue for you coming from this cooperation agreement, or is it embedded in something that you already have done?
Kai Öistämö: It is not really a net revenue, anything that we can speak of. It is more like a showcase of capability and part of other collaborations that we have with them.
Matti Riikonen: Okay. What type of cooperation is this? Is it a revenue share deal, or is it something that you just sell the data, both for new and historical data and get the fixed fee, but you do not participate in the business model that NVIDIA seems to be going for?
Kai Öistämö: To my understanding, NVIDIA does not at the moment sell weather forecasts or anything like that. So there is not really revenue to be shared at this stage. I think from both sides, this shows the capability and the potential that can be done in the future. What then the kind of actual business then becomes in the future, the future will tell.
Matti Riikonen: Okay. So there is no service yet to be sold.
Kai Öistämö: No.
Matti Riikonen: It is just the testing of capabilities.
Kai Öistämö: Correct.
Matti Riikonen: Okay. Because I was thinking that isn't this the type of activity that Vaisala and Xweather should be doing on its own, basically combining the best AI in the market
Kai Öistämö: We certainly
Matti Riikonen: that should be coming from you, and then combining some hardware that you just or technology that you just buy, and then of course you would be the sole provider of the service.
Kai Öistämö: Well, that's certainly our strategy. Now, there may be other opportunities, and we jointly thought that as part of our collaboration, that this is a great showcase on the power of the data that we actually own.
Matti Riikonen: All right. Excellent. Thank you. I have nothing further.
Operator: The next question comes from Pauli Lohi from Inderes. Please go ahead.
Pauli Lohi: Hello, it is Pauli Lohi from Inderes. First, I would like to ask about the outlook for the data center customer segment. Certain market intelligence providers, such as BloombergNEF, have projected that the relative growth data center capacity commissions will peak in 2027. So would you expect also your data center-related growth to peak soon, given that you often deliver some 12 months before the commissioning?
Kai Öistämö: It is way too early to comment on this. We have seen those forecasts and we have seen other forecasts, and I think at the moment, the important thing is that we see it as a growing market for the rest of the year, and then we do not expect it to be peaking any time in the coming months. How exactly will it develop and how will that then translate to our demand? Time will tell, but I think even speculating on this at this stage, we would not like to go there.
Pauli Lohi: Okay. Do you have any limitations in your production capacity or supply chain to serve Industrial Measurements customers if the growth stays at a strong level or even accelerates?
Kai Öistämö: No, we don't.
Pauli Lohi: All right. I would like to continue about this question related to the AI and weather forecasting. You mentioned in the report that developer customers and API customers contributed to the growth. I'm just thinking that if the share of this kind of API data increases about Xweather's revenue, does that affect your business or profitability? These customers probably don't need any tailored software services. They are using just the raw data. Is that good business for you compared to the Xweather in general?
Kai Öistämö: Yeah. First of all, I think it is a good business. Second thing is that what you should add to your list is that it's clearly an onboarding ramp for new customers for us. It's a way to engage at a low friction with our data and our capabilities through the APIs, try out and see what can be done. We obviously see how much usage and which organizations and everything else. This is clearly for us, we see that actually an on-ramp into a deeper engagement where we can onboard the customers in a much deeper way than merely in terms of API usage. There's obviously new innovation happening in the world. It's a great way of seeing what are the potential new customer groupings and new potential usages of the data that we have.
Pauli Lohi: All right. Then lastly, about that renewable energy. Your outlook for that is negative. Could you open a bit why is that so, even if there is strong demand, of course, for the power generation part?
Kai Öistämö: Still, if you look at the new wind parks, it is a relatively low activity at the moment in building. You have to remember where our exposure, first of all, in the renewable energy is. It is in the very early phases when there is the business cases for new sites, new projects is being done. The wind resources, other resources on that site is verified with the bankable data so that you can actually then have it as a part of your investment case and have it even raise money against it. That activity is still on a quite low level across the world. Like you said, on usage of wind park obviously continues to be and maybe some early signs on already developed sites further developing, but that has very limited impact to our offering and our participation on the marketplace.
Pauli Lohi: Thank you. That was all from me.
Operator: As a reminder, if you wish to ask a question, please dial star 5 on your telephone keypad. The next question comes from Waltteri Rossi from Danske. Please go ahead.
Waltteri Rossi: Hello?
Kai Öistämö: Yeah, Waltteri, go ahead.
Waltteri Rossi: Okay, great. Problems with the line. First of all, thanks for the presentation. First question relates to AI and the NVIDIA deal. What is your current view on how AI will actually transform the weather forecasting model market? Does the market actually even exist in the future, or will it be all about network and data that the model is built on top of?
Kai Öistämö: First of all, it is a fundamental change from what the weather forecasting is today. Just give you an idea that you see the weather forecast, you look at the weather forecast and how often it is updated today, every 6 hours, sometimes if you are really good, every 3 hours. I believe that actually weather is going to be a streaming service in the future. So completely different type of a model, how to consume and build, and the capabilities with AI and AI-based weather forecasting model will change all the participants and their roles, and so on in the world. There will be most likely multiple different AI models operated by different parties, some joint and some different. Then there will be like today, what I call weather forecasting, a fusion of all of this.
Kai Öistämö: That is one of the avenues that we certainly see as one avenue that we are going to be pursuing, that it is not only competing who has the best foundational model. Maybe there is some of that, but I think much more that how do you combine different capabilities in a smart way? How do you combine it with the data, especially the proprietary data that you have, and how do you fusion it with other data, creating even more proprietary data to support your model and your delivery of the forecast? Answer your question. Sorry.
Waltteri Rossi: Yes, it did. Thank you. Then on Industrial Measurements, order intake was again on a nice level, but it actually declined from Q2. Would you say that the underlying demand is still accelerating or not? What should we extrapolate going into 2027?
Heli Lindfors: Well, 2027 guidance we will give in February, so a little bit early for that. As such, we see that there are different kinds of orders. In Q2, we had for the first time, these kind of larger data center orders, and now we had some here as well. It does mean that between the quarters, it can easily be that there is more or less of them.
Kai Öistämö: Yeah, and even individual orders can go either side of the border, like when the order sizes get bigger, they start to have some impact. Not overstating that, but some impact between the quarters. I would not draw any kind of trend lines based on the two quarters at the moment. Just reminding you on the market outlook that Heli just said before we opened up for questions, that we said we expect the market itself to grow.
Waltteri Rossi: All right. Fair enough. Thank you. Could you also remind us how much of the demand in the data centers it is mostly coming from new construction? Am I correct, or is there already some recurring kind of revenues?
Kai Öistämö: Most of it comes from greenfields. As you know, data centers operated very differently by different operators. Some may have the same compute, which then leads that the same kind of cooling systems may be there even up to 7, 8, 9, 10 years. In some cases, especially on the leading side, they get redone completely in, say, 3 years. So cycles are very different. If you do the inside, like the compute completely new, then there is at least consideration on how the cooling system is going to be done, and that may give us an opportunity in what you call as a recurring revenue, if you allow that term to be used.
Waltteri Rossi: All right. One more on data centers. How concentrated is your sales in that segment among large customers?
Heli Lindfors: We don't have any customers that would be kind of material part of our sales. So there are multiple also in the data center segment that we sell to.
Kai Öistämö: Yeah. It's not like in some other industries that we would have only one or two of them kind of hyperscalers. It's much broader than that, our exposure.
Waltteri Rossi: Okay. Thank you. Maybe last one related to the Weather, Energy, and Environment segment. You said that renewable energy orders declined strongly, and you kind of downgraded the outlook there. Any ballpark figure on how much renewables is of the segment sales today? I think it used to be like 25%.
Heli Lindfors: It is still roughly the same levels that it has been. Of course, the more order intake we would get on the aviation and other sides, that may change in the next years to come.
Waltteri Rossi: All right. Thank you.
Kai Öistämö: When you do the math, you have to remember that in meteorology, as we have now multiple times commented, the comparison period of Q3 last year, we had a very strong Q3, especially on the meteorology side, where we had the Spanish radar sales. That's part.
Heli Lindfors: This percentage, you need to look at the longer period of time rather than a quarter.
Kai Öistämö: Correct.
Operator: Thank you. There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.
Kai Öistämö: No.
Niina Ala-Luopa: Thank you for the questions, and thank you, Heli and Kai, for the presentations. Thank you all for joining this webcast today. We have also published our next year's financial reporting calendar, so you will find our next year's dates on our website now as well. Our financial statement release for 2026 will be published on 11 February. See you then. Now thank you all for joining, and have a great week.
