Bittium. What thoughts?

Stocks
2207

Hi @Karoliina_Malmi

Happy New Year.

This Spanish contract has caused some confusion among investors. As you previously mentioned in your reply, the earlier 50M contract did not include product sales. Apparently, neither does this new 20M contract. I wonder if this new contract is included in that 70M “extension agreement” published late last year? (In the original agreement, the total sum was approximately 120M and now it is over 120M.) And how is that earlier 50M order distributed across different years?

I understand if the contract cannot be further elaborated on, but any possible information is welcome.

Thanks again in advance.

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2209

A very good question. And I don’t believe the customer would demand intentional ambiguity in communicating about such an order, so one has to conclude that this is either intentional on Bittium’s part or, even worse, sheer incompetence. Bittium’s announcements have been criticized for the same issue before. It is likely the responsibility of the communications officer. But it was nice that the total value of the order is now estimated at over 120 million.

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2210

This is how I’ve interpreted the Indra cooperation; there probably isn’t anything new here (either), but regardless.

The original press releases mentioned a deal value of approximately €120M for the Indra deal, but in the latest communications, the wording has changed to “over €120M”. This shouldn’t be dismissed with a shrug. In the defense industry, such a change in phrasing often suggests that the basic framework is locked, but probable additional orders (further development, customer-specific versions, production support, etc.) are already being anticipated, even if more specific guidance can’t—or won’t—be provided yet.

Furthermore, it’s worth remembering that this isn’t a “quick case”. I discussed this with an acquaintance who was involved in the ramp-up of mobile phone production at Nokia back in the day. His message was quite clear: production doesn’t scale to full speed in a few months, and often not even in a year. When you add defense sector certifications, NATO requirements, and Spanish (as well as Latin American) bureaucracy, it is entirely realistic that significant radio production will only be fully underway on a 1–2 year timeline.

However, this doesn’t mean that nothing is happening in the meantime. A typical model is:
– licensing and technology transfer
– pilots and pre-series
– limited delivery batches
– only then volumes

Bittium continues to do billable work in those intermediate stages: software, integrations, customer-specific modifications, and support. These might not make headlines, but they will show up as euros over time.

Furthermore, if Indra takes these solutions to Latin America, the requirements and variations will differ from those in Europe, which typically increases development work rather than decreasing it. That’s why I see “over €120M” not as a ceiling, but rather as the current floor for this collaboration.

In summary:
This is not a fast rocket or a hype case. This looks more like slow, step-by-step industrial cooperation where the money comes with a delay but more sustainably. The market often either gets excited too early or gets bored too quickly; reality lies somewhere in between.

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2211

Here are Kinnunen’s comprehensive comments regarding Bittium’s new order from Indra. :slight_smile:

Bittium has received a EUR 20 million order from the Spanish company Indra related to the Tough SDR technology licensing agreement. The order is part of the strategic cooperation announced in December and reinforces our view of the company’s excellent earnings growth outlook for 2026. In practice, the order increases the revenue stream we expect from Indra in the coming years, as we estimate it will be recognized as revenue in 2026-2027. We are not making any forecast changes at this stage, but the news clearly reduces the risk associated with the forecasts for the coming years and allows for a potential positive surprise in the 2026 guidance.

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2212

Hi @Tallitonttu

Thank you for the clarifying question. While some answers have already been provided here, I will confirm the details here nonetheless. In principle, we cannot disclose much more about either order than what has been stated in the releases. However, I will try to clarify the overall situation a bit.

The total estimate of over EUR 120 million mentioned in last Friday’s release includes the EUR 50 million order received in December and the EUR 20 million order received last Friday, which relates to the transfer of technology and production and also includes customer-specific customization work.

The EUR 70 million mentioned in the December release was the estimated portion in addition to the EUR 50 million order received in December, which would be realized if everything proceeded according to the information and plans at that time. And to answer your question precisely, yes, this EUR 20 million is part of the EUR 70 million total estimated in December.

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2213

A KL forum member has visited the terminal (Jan 22, 2026); SEB (nominee-registered) already owns over 2.2 million shares, or about 6.5% of the shares.
No flagging notifications have appeared, so it is likely that several parties have increased their holdings.
1.3 million shares on Dec 31, 2025.
1.6 million shares on Jan 14 after Zijoittaja visited the terminal.

I just visited the Euroclear terminal. Pareto’s holding in Bittium is zero. SEB owns 2,205,966 shares.

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2214

NATO+ key supplier, not bad.

With the agreement, Bittium is a recommended supplier for the NATO Communications and Information Agency (NCIA) and NATO member states, which can acquire Bittium’s smartphones, software, and accessories for secure mobile communication through an expedited process. The agreement covers Commercial Off-The-Shelf (COTS) solutions, through which NATO maintains its technological capabilities and responds to cyber threats.

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2215

https://etn.fi/index.php/opinion/13-news/18452-bittium-sai-ohituskaistan-naton-hankintoihin

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2216

Zijoittaja has been at the terminal again,

In SEB’s register on Jan 26, 2.347 million shares accumulated.

So indeed, over 1.0 million shares acquired during January so far,
And an increase of 1.3 million compared to the end of 11/25.

It’s good that a new party (or parties) showing such a significant interest has been found.

https://x.com/i/status/2016096178543161577

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2217

Comments on NATO status.

The announcement reinforces our confidence in the long-term growth of Bittium’s Defense & Security segment, but it does not cause immediate changes to our forecasts. Sales of the Tough Mobile product family have historically been limited and it has remained a niche product, and the agreement does not necessarily change this situation. In our own forecasts, growth in the Defense & Security segment is driven at this stage primarily by the previously announced large Tough SDR and TAC WIN orders as well as the Indra cooperation.

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2218

Picked from Inderes analyst’s comment:

The signed Basic Ordering Agreement (BOA) covers Bittium’s commercially available (COTS) security solutions. These include secure Bittium Tough Mobile smartphones as well as quantum-secure Bittium SafeMove and Bittium Secure Call software solutions. In our view, NATO approval supports sales, as it removes potential sales barriers and provides a common procurement framework. We estimate that NATO approval is not easy to obtain, and we consider it a certain guarantee of quality. At the same time, we emphasize that many competitors also have corresponding approvals. In the same category as the Bittium Secure Mobile Communication Platform are solutions from BlackBerry, Sectra Communications, Secusmart, and Apple (Indigo 26), among others.

In my opinion, it’s great that @Juha_Kinnunen has dug up information about competitors’ solutions in the same category. Since I understand very little about technology myself, I was left wondering how the features of competitors’ products and solutions compare to those of Bittium’s products and solutions?

Perhaps Juha could have some more in-depth information or insight to share on the matter, especially regarding security and quantum-security features? In other words, I would hope for a similar competitive landscape comparison for the “Security” products as Inderes’ comprehensive report provided for the features of the Tough SDR.

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2219

Unfortunately, there isn’t a similar comparison. However, in my estimation, “Security” is a significantly smaller part of the Defense & Security segment’s value, and the technology cycles are also faster here since they are based on “normal” commercial technologies. This is at least part of the reason why device development has been outsourced to a partner (HMD).

Regarding security features, I assess Bittium to be top-tier and highly competitive, and this is specifically where they are trying to gain a competitive advantage. Regarding the device, it’s hard to say. Tough Mobile 2, which is the main product for now, is likely already a bit technologically outdated. I don’t know how good of an analogy this is for the big picture, but Tough Mobile 2 is 4G generation, and Tough Mobile 3, launched in the fall, is then 5G. Deliveries for the new model will start during 2026, and this is likely where the Security segment’s greatest expectations are focused. A competitive product is coming, but whether it’s exceptional compared to competitors—at least I wouldn’t dare claim that, but I’d be happy to be proven wrong.

In summary: in my own thinking, Security is a good business that reasonably supports the whole. However, it would be a clear positive surprise if major breakthroughs were achieved here. Instead, I see a clear link to Defense; meaning if success is achieved there, it opens up cross-selling opportunities and potentially new doors alongside it.

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2220

Thank you @Juha_Kinnunen for the response. Do you know if competitors are marketing quantum security?

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2221

Yes, although there are at least nuanced differences between them. If I use English now so I don’t translate incorrectly, Bittium says the Tough Mobile 3 is “Quantum-Safe”. For example, Sectra has used the term “Quantum-Resilient” for years and Secusmart (BlackBerry) seems to have used the term “Quantum-Ready”.

How should these then be interpreted? I don’t dare to start differentiating or evaluating them based on current information, although to a layman, Bittium’s “safe” would seem like the strongest statement. Let’s put it on the list of things to investigate, at the latest when the Tough Mobile 3 is on the market.

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2222

AI responds like this: :backhand_index_pointing_right: Quantum-Safe = the solution is built using encryption algorithms resistant to quantum threats, not just current weak classical ones.

:backhand_index_pointing_right: Quantum-Resilient = resilient for the time being, but perhaps not “fully certified quantum-safe” in the solution for all situations.

:backhand_index_pointing_right: Quantum-Ready = the product or organization’s platform is designed so that it can later upgrade or implement proper post-quantum security.

:backhand_index_pointing_right: In practice, quantum-safe has the strongest marketing value, quantum-resilient is a realistic technical description of the system being better able to withstand future threats than classical encryption, and quantum-ready is more of a promise or design readiness than “ready now” protection.

Bittium’s “quantum-safe” is therefore generally the strongest declaration compared to a solution being only “resilient” or “ready” for the future.

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2223

The shareholder list has been updated.
SEB scooped up just under 1.1 million shares in January, and once again, there has been a counterparty for the trades. I didn’t check whether there are any major decreases among those who have completely dropped off the list.

  • Varma -130k shares
  • Jtel -225k shares
  • Aktia Nordic Micro & Capital & Secure -263k shares total
  • private individual - 120k shares
  • others approx. -300k shares

JTel is a private equity investor, Hulkko’s business and perhaps someone else’s as well.

There were a couple of larger increases as well,

  • SEB, then, 1,100k shares
  • OP Index 42k shares
  • OP Small Cap 61k shares
  • S-Pankki Fenno 46k shares

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14 Likes
2224

" If I am right, which of course is not certain at all, the Indra deal will result in about 120 MEUR in revenue, and an estimated 80% of this will be free cash flow"

In my opinion, that is a completely over-optimistic view.
Who pays for the following items:

Technology transfer and integration:

  • engineering work
  • documentation
  • support for Indra’s systems
  • potential customizations
  • export control
  • certifications
  • contract management
  • customer support

Comparison with licensing professionals

What if the operating profit initially settles somewhere between Nokia Technologies and Qualcomm’s patent licensing business at 50-70% EBIT, and free cash flow is naturally lower due to taxes.

Or was Bittium once again so unique that they just send a USB stick to Spain and convert 100% of the deal value into operating profit and 80% into free cash flow?

6 Likes
2225

It might be on the high side; much depends on how much is ultimately pure license income. I have already commented on that in the report etc., so I won’t repeat it, but I didn’t take taxes into account for that 80% cash flow. Taxes aren’t a concern yet, as Bittium has many usable losses (so-called shelf depreciations), but in the longer term, they will come—if excellent results are delivered in the coming years as I predict.

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2226

Username Plondi on the neighboring forum. Thanks Plondi. According to my calculations, SEB owns/manages over 7% of the shares. Are they pushing Peppi onto the board…

“Sepi came back and owns 2,524,462 shares. So SEB owns 110,685 more shares than in January (2,413,777) according to the data shown on the terminal.”

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2227

It’s great that “Peppi” didn’t realize to scoop up the shares earlier; lucky for the owners, we’re already getting a good price, although there’s likely still upside potential. We’ll see then if “Peppi” is a pre-arbitrageur for the defense ETF or if we’ll still see an “international match” in the defense sector :joy:

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