Bittium. What thoughts?

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Really impressive. Not only was Q1’s slight shortfall against forecasts recovered, but we exceeded them, and by a wide margin. It seems orders are pouring in—the kind that either don’t need to be announced or aren’t considered significant enough to disclose. Either works for me. Either there are a lot of small ones coming in (satisfied existing customers) or there’s a requirement not to disclose, which might point to new customers. The small ones could, of course, be new customers too.

But regardless, such high-growth companies usually don’t grow profitably; profitability tends to follow once revenue growth stabilizes. Here, both revenue and earnings are growing hand in hand.

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Juha Kinnunen’s quick comment: Strong defense deliveries and orders significantly exceeded expectations

Inderes forecast table
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Bittium’s Q2 result clearly exceeded our expectations in terms of both revenue and profitability, thanks to strongly accelerated product deliveries in the Defense & Security segment. The positive surprise was accompanied by an excellent level of new order inflow for the Defense & Security segment, which raised the order backlog to a new record. The order inflow was particularly surprising, as no major orders were announced during the period other than those from the Finnish Defence Forces. As expected, the company reiterated its full-year guidance, but the brisk pace of deliveries in the early part of the year and high order levels significantly reduce the performance pressure for the second half of the year. Preliminarily, we see some upward pressure on our forecasts following a very strong Q2. We expect a very positive share price reaction today, especially after the recent decline in the stock.

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Great 2Q2026, especially considering that there weren’t really any actual new sales announcements released. Well, of course, Indra only came along towards the end of 2025. And 2H2026 should be better.

Likely, the familiar cases have been trading more and across a larger portion of the assortment.

It’s great to see that after the initial phase of the deal, it’s deemed so suitable that trade volumes are increasing, and perhaps the used assortment is expanding, and maybe updates are being sold.

There is an interview with Toljamo in Kauppalehti; at least there is no paywall right now.

The article reviews things such as:

  • various defense forces have a great number of old systems that are in need of modernization
  • Bittium’s system is based on software architecture that can be updated and even bring AI to the field
  • the tactical communication market is 10 billion euros and is growing strongly
  • discussions are ongoing with about ten potential European customers, as previously communicated
  • several weapons system suppliers were also gained as customers in the beginning of the year
  • of course, competitors are also developing and evolving, even though Toljamo talks about a lead of several years

Defense industry hit company surprised even its leader – This is why Bittium is growing rapidly now Puolustusalan hittiyhtiö yllätti johtajansakin – Tästä syystä Bittium kasvaa nyt kohisten | Kauppalehti

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These long-term financial targets are starting to look like nothing more than paper. The investments in internationalization were supposed to have an impact by 2026.

“Bittium targets an average annual net sales growth of 20–30 percent and an operating profit level of 10–20 percent in the long term.”

This is certainly worth holding.

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Below are the key figures for the Defence & Security (D&S) business segment.

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After crunching the numbers in Excel and following the Q2’26 webcast, I concluded that a significant portion of the D&S segment’s revenue growth and improved profitability in Q2’26 is likely explained by major product deliveries to weapon system providers, and partly also by the smooth implementation of the Indra licensing agreement. This is supported by the fact that in Q2’26, the D&S segment’s depreciation (= operating profit - EBITDA) increased to approximately -1.5 MEUR, whereas it was still around -0.8 MEUR in Q1’26 (cf. Outlook for 2026: “The operating result will be affected by depreciation corresponding to the license income received in 2026”).

As a relatively new customer segment, providers of various weapon systems might already be a more significant customer segment in Bittium’s growth story than analysts previously assumed, and presumably, they will continue to be so in the future. I assume that these weapon system providers are not waiting for the outcomes of “national tenders” by various countries’ defense forces; instead, they want to integrate the features of Bittium’s advanced products—perhaps even unique ones—directly into the capabilities of their own weapon systems already now.

Below, I have quoted one description from Bittium’s half-year report (p. 9) regarding the potentially unique features I am referring to:

“Together with MarshallAI, the capabilities of Bittium’s tactical radios were enhanced so that they also act as AI-assisted electronic warfare sensors, ensuring the safety of their users. The feature will be made available to Bittium’s customers via a software update.”

Bittium Corporation Half-Year Report January–June 2026

A more detailed description of the feature can be found here in Bittium’s press release from June 9, 2026.

Similar descriptions of the features of Bittium’s advanced products can be found, for example, in the company’s other press releases.

https://www.bittium.com/fi/sijoittajat/porssi-ja-lehdistotiedotteet/2026/

Bittium’s CEO speaks of a multi-year lead over competitors. I personally interpret this lead as an R&D advantage in product features compared to competitors’ product features, or something similar. :slight_smile:

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I’ve been wondering about these defense suppliers and exactly what kind of weapon systems these products go into. Air defense, perhaps? And what, then, is the role of Bittium’s product in that?

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Tactical and secure data transmission is at least the first thing that comes to mind.

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Kinnunen’s updated view on the company. The text also gives a “hold” recommendation for investors who can withstand volatility. :slight_smile:

We are raising Bittium’s target price to €36.0 (previously €32.0), but we reiterate our “reduce” recommendation. The Q2 report was excellent, but we believe the 36% rise, or the increase of over €350M, was exaggerated without new international breakthroughs. The 2026 guidance remained unchanged, and our operational forecasts rose by about 10%, which is why we raised our target price. We believe significant orders are a matter of time in the modernization wave of tactical communications, but our forecasts for the coming years also depend on these orders. We believe the stock’s tight valuation may cause downward pressure while waiting for new international breakthroughs. On the other hand, investors who can handle volatility can stay on board for Bittium’s attractive long-term growth story.

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NuWays:
Target: 40 (Buy) → 42€ & Buy

High quality beat, they say.

Indeed, orders from weapons manufacturers were good and, in terms of visibility, a new development, although Bittium has, of course, talked about its involvement in things like iMugs programs. Customer decision-making is faster and less politicized. And this is typically a ‘sticky business’ as well.

Note: If you install the NuWays app, you can find the full update PDF there.

Notably, part of the orders came from weapons manufacturers, an order source that has developed faster than we anticipated, adding a second demand channel alongside national procurement. The CEO named manufacturers of ground-based air defence systems as one such customer group, integrating Bittium’s tactical communications into their platforms.

The robust delivery execution and the even more impressive order intake increase our confidence in a strong finish to the year. Management reiterated its guidance for an H2 weighting, consistent with the seasonality of the past three years. We raise sales estimates for this and the coming years as we see Bittium increasingly gaining traction across customer groups and regions.

In light of the above, we raise our PT to € 42 (old: € 40) and reiterate our BUY rating, based on our DCF model.

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From the NuWays analysis:

The book-to-bill ratio is indeed 1.32, which I understand to be a very strong indicator of future growth as well. In other words, for every euro delivered, Bittium received 1.33 euros in new orders. Thus, the order backlog grew significantly, even though deliveries / net sales were already showing strong growth.

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Linkki SEB:n analyysiraporttiin, missä käyvän arvon haarukkaan tuli muutos:

"We lift our fair equity value range to EUR 35-45 (31-40) per share
We hike our fair equity value range due to our estimate hikes."

https://research.sebgroup.com/corporate/reports/143472

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