Interim report

Q2 net sales rose 74% to TSEK 15,308 (vs. TSEK 8,791), but the company recorded a larger loss after tax of TSEK 28,893 (vs. TSEK 22,911). Gross margin fell to 52.6% from 66.2%, and operating cash flow turned more negative at -TSEK 33,095 (vs. -TSEK 20,466). Electrode sales volume surged 118% to 40,144 units, but profitability and cash burn deteriorated alongside the growth.

Analysis

This print looks less like a growth inflection and more like a classic low-quality scale-up: revenue is outrunning economics, but the business is not yet converting that volume into cash. The key tell is the margin reset — when gross margin falls that sharply while unit growth accelerates, it usually means either pricing pressure, mix dilution toward lower-value repeat orders, or a customer win that was bought too cheaply. In the near term, that tends to compress EV/sales multiples because the market stops capitalizing top-line growth at “growth stock” rates and starts underwriting a funding story.

The second-order issue is working capital. Negative operating cash flow alongside higher sell-through implies the company is likely funding growth with receivables, inventory, or extended credit terms, which can create a delayed squeeze even if reported revenue stays strong. If repeat orders are concentrated in a few accounts, the headline “recurring” revenue may actually be channel replenishment rather than true end-demand, which makes the next quarter the critical proof point.

Over 1-3 months, the main catalyst is whether management can stabilize gross margin and narrow the cash burn without sacrificing volume. Over 6-18 months, the risk is dilution or expensive debt if the company has to keep buying growth. The contrarian view is that the market may be underestimating how fast a weak margin profile can re-rate a stock down, even with high unit growth, especially in a niche hardware/consumables model where scale should have helped by now.

Key Decisions for Investors

• Reduce or avoid long exposure into any post-print bounce; the setup favors multiple compression over the next 1-3 months unless gross margin reverts materially.
• Treat the name as a financing-risk watchlist item: if operating cash flow stays negative next quarter and gross margin does not recover, assume dilution risk has moved to the front of the tape.
• Relative-value: pair long profitable healthcare/medical device exposures (e.g., XLV or IHI) against weaker small-cap device/consumables names with negative cash flow; the market should reward balance-sheet durability over headline growth.
• Set a hard falsifier: if next quarter gross margin returns above ~60% and operating cash burn improves meaningfully, cover shorts/reduce underweights — that would indicate the margin reset was transitory rather than structural.